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Economy 'can't cope' with multibillion spending cuts

The economy will not be able to cope with a multibillion-euro onslaught of public spending cuts in December's Budget, a leading think-tank claimed today.

Equality campaigners Tasc warned more austerity measures without investment will simply lengthen dole queues and plunge the country further into crisis.

They have called on the Government to instead make savings from overhauling the tax system - including a new 0.28pc property tax - while staggering cutbacks over the coming years.

Paula Clancy, Tasc director, blamed recent Budgets for driving up joblessness.

"The International Monetary Fund has said that for every one billion euro you take out of the economy, you are going to lose about 20,000 jobs," she said.

"The austerity packages we have had up to date have not the effect that was hoped for - what we have had is a continual haemorrhaging of jobs."

Tasc is proposing:

:: A 0.28pc property tax, which would work out at around €600 a year on an average €430,000 house and raise €1bn;

:: Standard tax relief rate for pensions, raising €750m;

:: Overall tax reforms targeting reliefs, raising €3bn;

:: A €3bn "economic recovery fund" to lend to small businesses, fund retraining and upgrade infrastructure such as broadband.

Ms Clancy said the recovery fund could be financed from the National Pension Reserve Fund.

"It's a rainy day fund... and it's time we used it," she said.

"We are not going to get back to recovery and we are not even going to be successful in dealing with the deficit if we don't get growth going again and get jobs."

Tasc also called for public sector consultancy fees to be slashed in half and professional fees to medics to be cut.

Cheaper generic drugs should be prescribed where possible and financial support for private fee-paying schools should be reduced, according to the think-tank.

PA Media