Monday 17 June 2019

Hibernia lies in tatters as Britain simply gets on with its recovery

The British can have an adult debate about public sector cuts while we can't even get our sums right, says John-Paul McCarthy

Speaking at the height of the American rebellion against Britain in the 1770s, one Irish commentator tried to hitch his wagon to the resurgent star in the west and said "we are in watercolour what they are in fresco".

This image is much better deployed as a description of the Anglo-Irish relationship, especially in the current economic climate.

While facile comparisons obscure more than they illuminate, it is hard not to think of poor, tattered Hibernia when observing the roar and dazzle of contemporary British politics.

Whereas the Irish Government has once again allowed itself to be humiliated by wayward financial predictions, David Cameron and Nick Clegg are exuding a sense of calmness and serenity as they take the UK slowly out of the EU dangerzone.

During his weekly parliamentary joust with the Labour dauphin, Ed Miliband, Cameron was able to boast of an excellent market reaction to the public sector cuts that were announced in the recent Comprehensive Spending Review (CSR).

Standard & Poor's upgraded Britain's triple A credit rating, having digested the details of the CSR, putting the UK into the "stable" column, and thereby ending its unhappy sojourn in the "negative" doldrums.

Moody's and Fitch also concurred in the judgment that the British coalition government has begun the heavy lifting required to shrink the national deficit back to manageable levels.

Cameron could also point to the surprisingly beneficent third-quarter GDP figures as well, which pointed to British economic growth at twice the expected level, following strong private sector momentum, especially in the construction sector. (Recent Irish history suggests that the British better not bet the house on houses though.)

As the economist Alan Clarke from BNP Paribas noted, "Standard and Poor's has confirmed what the market had already concluded -- that Britain is now further away from a credit downgrade. It's good news for the government. They've had the nod of approval from business, the markets and now S&P that it was right to cut the deficit aggressively."

It is demeaning for any sovereign state to find itself at the mercy of ethereal, external entities like the bond markets, and if we could get back to what the philosopher John Rawls once famously called "the original position", then we might surely design our sad world more carefully.

But Cameron and Clegg recognise that we can only start from where we are, and they have been forthright and professional in their arguments about the necessity of substantial public sector cuts.

They do not find their hands tied by the quasi-corporatist model of economic management which Ireland has practised since the Eighties, and which provides the intellectual justification for the Croke Park strategy which may not survive our own €15bn cuts.

Though he has none of the missionary zeal which Mrs Thatcher and Tony Blair learned to project in their chosen areas of expertise, Cameron presents himself as a tough-minded champion of a national perspective in Britain.

He is not afraid to court short-term unpopularity.

When Miliband taunted him in the Commons with some of the hardships that may arise as a result of the government's insistence on cutting housing benefits for those on long-term job seekers' allowance, the prime minister bluntly told the House that he needed that money for hospitals and schools.

His sense of strategic priority seemed to trump the Labour leader's emotional petition.

(That said, he may well have made an unnecessary error in the EU budget negotiations by giving the impression that a formal budget freeze was ever possible.)

Above all, Cameron acted like he knew what he was about, which is a lot more than can be said for the Irish Government.

The Irish Government had been prepared to stick by its initial estimate of a €7.5bn correction over four years as late as a couple of weeks ago.

And yet it was forced to confess that it had badly miscalculated its figures last week -- further undermining international credibility by adding incoherence to the already ample charge sheet which bears its name.

The British can have an adult debate about the distribution of public sector cuts required to protect their financial integrity because the government does not have to appear on television every few weeks apologising for invertebrate economic forecasts.

The Taoiseach and the Minister for Finance have to suffer this added indignity during each major economic set-piece, something that distorts the public debate by encouraging cynical calls for apologies and mea culpas that are largely irrelevant to the massive public sector pay bill they have decided to set in stone as per Croke Park.

Cameron's suave public performance is an attempt no doubt to hide multiple private doubts, but at the very least, we can say that the British prime minister is directing an important intellectual and moral debate, one where the austere deficit hawks at the European Central Bank have to do battle with elements at the IMF who support the Labour left in their argument that a precipitate fiscal squeeze will do too much damage.

Cameron and Clegg have offered their analysis and taken their first major economic decisions with some confidence.

During the Nineties, Irish diplomats loved to privately taunt their British equivalents in the Northern Ireland negotiations.

The Irish apparently liked to think of themselves as a third division team who could give Manchester United a run for their money any day of the week, whether the subject was decommissioning or repealing the Act of Union.

Today, the contrast is indeed stark, but we are truly the pitiful minnows who cannot even get their sums right.

John-Paul McCarthy recently completed a doctorate in Irish history at Exeter College, Oxford

Sunday Independent

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