Tuesday 28 February 2017

Colm McCarthy: Back off Barroso, you did very little to help

Brussels should look closer to home for the reasons why the crisis lasted as long as it did, says Colm McCarthy

A protester wearing a Barroso mask at an anti-austerity demo in Brussels last week. Photo: Yves Herman
A protester wearing a Barroso mask at an anti-austerity demo in Brussels last week. Photo: Yves Herman

Since the crisis broke in 2008, it has been clear that only economic growth at a decent rate can guarantee sustainable public finances. Zero growth, the experience until recently, will see the debt burden continue to grow and sluggish growth will not do the trick either.

Calculations by the Fiscal Advisory Council and the IMF stress that the key unknown, in assessing debt sustainability, is the future growth rate.

If the economy gets stuck in a rut the debt mountain will rise further and default risk will stay high. Only if the figures are re-worked with faster growth, say three per cent per annum, will prudent budgetary policy make the numbers come right over the next several years.

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