Sunday 20 August 2017

Government borrows can of petrol to throw on an economy on fire

With the recovery going nicely, this Budget was a missed opportunity to pay down Ireland's debt, writes Colm McCarthy

‘Reliance on the tender mercies of the ECB should have taught us that when small member countries get into trouble, they can expect no favours'
‘Reliance on the tender mercies of the ECB should have taught us that when small member countries get into trouble, they can expect no favours'
Colm McCarthy

Colm McCarthy

'When you come to a fork in the road, take it' was the advice of the New York Yankees baseball legend Yogi Berra, who passed away three weeks ago. The Taoiseach used the 'fork in the road' metaphor to characterise the Government's Budget strategy in his Dail address on Wednesday, shortly after Fiscal Council chairman Prof John McHale had made it plain that the fork chosen was the wrong one. The Budget was needlessly expansionary for the second year in a row and the Government is trying to spend its way out of a boom.

Prof McHale, whose job it is to consider the prudence or otherwise of budget policy, expressed concern on RTE radio on Wednesday morning not so much about the announcements in the Budget itself, which had been well flagged, but about the figures for 2015 released yesterday week.

The Government provided (borrowed) extra funds for over-shoots on spending targets in the current year and the over-shoots were surprisingly large. The culprits included the usual prime suspect, the Department of Health, but there were expenditures well above budget in several other departments too.

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