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We'll have to pick up the punch bowl tab - there's no such thing as a free stimulus

Sean Barrett


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Borrower beware: Free money from Brussels has ended – the bigger the EU stimulus the more we pay

Borrower beware: Free money from Brussels has ended – the bigger the EU stimulus the more we pay

Borrower beware: Free money from Brussels has ended – the bigger the EU stimulus the more we pay

Lobbyists and interest groups have had a field day advocating that the Government should borrow virtually unlimited amounts of money to "stimulate" the economy. Money was never so cheap, they say. The Europeans will pay. We can send the bill to future generations. The usual suspects for unlimited public spending like lots of subsidies and tax breaks, but "stimulus" sounds so much nicer.

The European Central Bank's task is to ensure that what its stimulus does is efficient rather than unlimited. William McChesney Martin, governor of the US Federal Reserve from 1951 to 1970, defined the art of central banking as "to take away the punch bowl just as the party gets going". Martin chose central banking as a career just ahead of becoming a Presbyterian minister and became known as "the happy Puritan" in economic circles when he got the balance just right. Stimulus is like sincerity in the words of Oscar Wilde, in that "a little stimulus is a dangerous thing and a great deal of it is absolutely fatal". The Finance Minister recently told reporters that he has received more claims for extra public spending next year, alias stimulus, than the entire anticipated Exchequer tax income.

A welcome note of caution at the weekend came from An Taoiseach, speaking in Brussels. Ireland is now a net contributor to the EU. The bigger the EU stimulus the more we pay. Free money from Brussels ended some time ago. The punch bowl is on our tab now - a sobering thought. We have to pay for punch bowls for other countries as well. Our capital spending in the National Development Plan was already above the EU average despite IMF concerns about weak assessment procedures here.