Friday 9 December 2016

More pain, little gain awaits us

Published 28/11/2010 | 05:00

When the Government announced its four-year plan last Wednesday, we were supposed to believe it was part of some great strategy. Here was Ireland laying out a hair-shirt policy for the long term that was meant to restore confidence in the markets and convince the IMF, the EU and the ECB that we are a good bet for an €85bn overdraft at some sort of affordable rate.

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The plan was welcomed in Europe but it made no difference to our international standing. The price tariff on Irish bonds did not improve. That should not be a surprise. When the Greeks got their bailout of €110bn , their bond margins soared.

There were many disappointing aspects of the four-year plan. It has now regrettably shifted from being a quarter dependent on taxes to a full one-third tax focused. Worse, the decision to front load in next month's Budget to the extent of 40 per cent had a little-noticed bit of front loading of its own. All the indications are that the December 7 Budget will be heavily weighted towards taxation, with negligible cuts in the cost of the public sector.

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