All is fine. No need for a giveaway Budget...

Imagine you are the finance minister of a heavily indebted country emerging from a deep recession, during which the state lost the ability to borrow and had to rely on official lenders, including the IMF. You have a legacy of high debt and high unemployment, and the budget is still in deficit. But things are looking up. The economy is expanding again and is predicted to grow in future years. Unemployment is falling. Inflation is roughly zero. What would be the most prudent budgetary strategy to adopt?

If economic growth could eliminate the deficit without further action and the expansion seems to be continuing, the textbook advice would be to do nothing - leave expenditure and tax rates at current levels and take no chances. The budget speech would be short: 'We are pleased with how things are going and have no proposals'.

The Irish Government was presented last week, on the publication of the ESRI's latest economic commentary, with a wonderful opportunity to announce that it proposes to do nothing at all for a while. Instead the plan is to have an April 'statement' on macroeconomic policy followed, it appears, by an expansionary budget in October. Thus the time-honoured Irish tradition of pro-cyclical budgets, as in 'If I have it I spend it', is to be continued for another cycle.