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.
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.