Coalition must ignore polls and stick to €2bn in cuts
Budget will give Government a real chance to bring deficit in sight of 0pc by 2016 if it resists siren calls to loosen policy
Published 03/08/2014 | 02:30
Given the recent upturn in tax revenues and favourable employment trends, it may be possible for the Government in October's Budget to hit the 2015 target, a deficit below 3pc of GDP, without the full €2bn in expenditure cuts and tax increases that had been pencilled in. This morning's opinion poll from Millward Brown suggests that 45pc of voters think budgetary policy should indeed be relaxed, with only about a quarter in favour of the full €2bn adjustment.
Politicians regularly assert that they pay no attention to opinion polls and they should certainly pay no attention to this one. If the favourable trends continue and the Government sticks to the €2bn figure, the deficit should be under 2pc next year, and in sight of zero the following year. It would be really foolish, on the back of favourable trends that are not yet clearly established, to recoil from the prospect of actually getting ahead of the curve for a change.
It would also be in conflict with advice to the Government from the European Commission, the ECB, the OECD, the IMF, the Central Bank and its own Fiscal Council, all of whom have recommended that the €2bn adjustment be implemented.