Tuesday 12 December 2017

Thomas Molloy: Minister covers tracks on Budget but can't hide room for manoeuvre

Michael Noonan's native county was almost certainly on his mind when he warned that Ireland was like a team in Croke Park that was five points ahead in the last quarter, but could still lose everything.

It was an accessible analogy with Limerick having lost to Clare in the All-Ireland hurling semi-final last month. But it made little sense. Sporting contests throw up winners and losers, often as the result of chance.

An economy depends on thousands of small decisions rather than a few big ones.

Mr Noonan covered his tracks still further by saying that the size of next month's Budget cuts depended on two important figures which are not yet in the public domain: the Exchequer figures for September and economic growth in the second quarter.

While that sounds plausible, the reality is that the Central Statistics Office's preliminary figures for gross domestic product are always subject to endless revisions, while the Exchequer figures grow more meaningless by the month.

These excuses hide what the bond markets are telling us – that Mr Noonan has a free hand when it comes to the Budget.

Hundreds of courageous decisions made by the Finance Minister over the past two years have now given him the room to do what he wants in October's Budget because most people now accept Ireland is on the mend.

Nobody expects economic forecasts to be precise to the last decimal point, so there will be no dire consequences for Ireland if we fail to hit the deficit targets.

All that matters is the belief that there is the political will to take action if things start to go wrong again. Luckily for Ireland, most foreigners believe this country is tough enough to make cuts when necessary.

Mr Noonan knows this better than anyone, so the obvious conclusion must be that he is playing for time.

There are two reasons to play for time. One is political; the Coalition is divided on the issue of austerity. The second reason is that Mr Noonan, like many teachers and most witty people, is something of an actor and has a good sense of timing.

He wants to create a little suspense around what could well be his last Budget. The austerity debate will go back and forwards between now and Budget day, generating a modicum of dramatic tension, but the reality is that Mr Noonan is the first Finance Minister in years to have the scope to present a relatively gentle Budget.

It would be most surprising if he does not stand up in the Dail in October and announce that conditions are improving slightly – and that he has found a little money to invest in education and health.

Irish Independent

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