Sunday 18 February 2018

Finding a path without making cuts

The country needs e12bn by 2013 -- a goal well within our means without having to obey the 'GDP idiots', writes Marc Coleman

THE events of Friday night have turned our budgetary crisis from a national and European affair, into a global one. The possibility of an Irish default means a shaky euro, and a shaky euro raises the risk of something economists fear greatly: a currency war that could cause a double-dip global recession.

A fortnight ago, this column argued that our budgetary correction would be around €12bn rather than €15bn. Last Tuesday Olli Rehn also implied the €15bn figure could be too high. But we must find at least €12bn by 2013. So, although debating global events is tempting, we can't control them. Instead, we must debate and decide where to find that sum by 2013.

In the coming week, and on the website, a plan and accompanying forecast to reduce our deficit to 3 per cent of GDP by 2014 and eliminate current borrowing by 2016 will be published. Headline-grabbing policies -- cutting welfare or public sector job cuts -- will be avoided. Instead thought-out and strategically sequenced measures will be detailed so that if the adjustment really is larger than e12bn, tax hikes and welfare cuts will only occur in 2014 after more deserving savings are made.

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