Colm McCarthy: Borrowing for non-essential projects will delay recovery
Projects to remove bottlenecks that never existed offer no return on public expenditure, says Colm McCarthy
Economic activity in Ireland, as measured by the level of real GNP, was down 15 per cent from the end-2007 peak in the first quarter of this year. If the economy finally begins to recover next year, it is unlikely that the 2007 level of GNP will be reattained any sooner than about 2017. There will have been a full decade of zero growth.
Government investment intentions, as expressed in the National Development Plan 2007-2013 and published in January of the final bubble year of 2007, were based on the expectation that economic activity would expand by about 50 per cent over the subsequent decade.
A big investment in infrastructure would have made sense if these expectations were likely to be realised. Once it became clear that they were not, and that a decade of zero growth was more likely, the Government scaled back the capital programme.