Business Irish

Tuesday 16 July 2019

By the book: Crisis scars still with us, says Donohoe at launch

Launch: Prof Patrick Honohan with his new book ‘Currency, Credit and Crisis: Central Banking in Ireland and Europe’
Launch: Prof Patrick Honohan with his new book ‘Currency, Credit and Crisis: Central Banking in Ireland and Europe’
Readership: Ruairi Quinn and Paschal Donohoe admire Prof Honohan’s publication

David Chance

The budget process needs to take account of the fact that many of the scars of the financial crisis have not yet healed, according to Minister for Finance Paschal Donohoe who said it was the Government's role to decide spending and policy priorities.

Minister Donohoe was speaking after a torrid week that has seen him criticised by the Irish Financial Advisory Council for spending surplus proceeds from company tax payments rather than saving them.

"The balance I need to strike... is how we can deal with the social scars, how we can deal with the pent-up need or demand that is still there, that citizens still feel while trying to get the balance right with the needs of tomorrow," he told an audience at the Institute for International & European Affairs (IIEA) to launch former Central Bank of Ireland Governor Patrick Honohan's book on the crisis.

The Fiscal Council criticised the budget process, saying that €12.3bn of corporate tax revenues should have been saved and pointing to €500m a year of overspending on health that it says remains unchecked.

Mr Donohoe cited the council's report as one of the safeguards put in place in the wake of the crisis that made the government more accountable.

"The debate that I have been involved in, the scrutiny that they are placing me under, that is not evidence of institutional weakness, that is evidence of institutional strength," he said of the Fiscal Council's role.

"It then is then up to the Minister of the day... to form a view on that," he said.

While the Fiscal Council was highly critical of government spending policies, there was a more upbeat assessment from the International Monetary Fund which on Monday said the government should stand ready to increase spending in the event of a "hard Brexit".

The budget process has been complicated by its coming just two weeks before the UK's October 31 exit date from the EU.

Irish Independent

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