Tuesday 16 October 2018

A Precarious backdrop to Paschal's Budget

The economy is not back on a boom-bust roller coaster, but there is little fiscal leeway if big external risks materialise

PRESSURE: Finance Minister Paschal Donohoe must contend with uncertainly over Brexit, a trade war between Europe and the US and Italian economic strife, ahead of Tuesday’s Budget. Photo: AFP/Getty
PRESSURE: Finance Minister Paschal Donohoe must contend with uncertainly over Brexit, a trade war between Europe and the US and Italian economic strife, ahead of Tuesday’s Budget. Photo: AFP/Getty
Dan O'Brien

Dan O'Brien

The boom is back. The good times are rolling again. Ireland is the fastest growing economy in Europe: this year, last year, and, according to some predictions, next year. One hears this a lot, with the latter point repeated frequently by ministers.

This talk perplexes many people. They ask: why, if the economy is roaring as it was in the Celtic Tiger years, do I not feel as flush as I did then? Why, they ponder, is the Government not doing more to solve problems that result in, among other things, ministers and TDs being flayed in the media on a daily basis?

The main reason people don't feel as prosperous as in the past, and why the Government isn't increasing spending as it did back in the halcyon days, is that the economy is doing well, but it is not growing nearly as fast as it did during the Celtic Tiger period (1996-2001). It is growing considerably more slowly than during the property bubble period (2002-07).

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