Stability won't create jobs
Published 17/01/2010 | 05:00
Sir -- Last week, Alan Ruddock took me to task for criticising the Government's obsession with the banks and the books at the expense of the real economy. He takes the view that these obsessions are the "right ones", and that stability is the most effective policy for job creation. But Mr Ruddock has missed the point. Stability is a prerequisite for recovery. But it will not, in itself, put money in people's pockets or give them jobs.
After the recession of the early Eighties, the economy returned to GDP growth in 1983. The public finances were stabilised in 1987. But significant growth in jobs and real incomes did not occur until the early Nineties due to a competitive boost from devaluation, income tax cuts from the first National Agreement that increased domestic demand, and an investment boom driven by multinationals.
An obsession is a preoccupation with one or more things to the exclusion of everything else. The Government's obsession with the banks and the budget has prevented them from dealing with the job crisis. This requires a plan to restore competitiveness by reducing the cost of doing business, as Fine Gael has consistently proposed, boosting investment in infrastructure as proposed in our New Era plan, and by increasing domestic demand by reducing VAT, abolishing travel tax and increasing mortgage interest relief as proposed in our fully costed Alternative Budget.