Wednesday 13 November 2019

A small step but we need help on journey

THE sentiment behind the stimulus package unveiled yesterday brings a tinge of hope despite it being a stimulus with a small 's'. The dynamic behind such economic kickstarts is generally a massive injection of cash. With the country's national purse no longer in our own hands, this was always going to be more boardwalk than big box-office in scale.

It was one small step in what will have to be a twin-track approach to economic survival.

There is a heavy onus on the Taoiseach Enda Kenny and his Finance Minister Michael Noonan to give Europe a positive signal that we are moving might and main to turn the tide.

But the EU also has a responsibility to respond. It is only by addressing the macro-economic debt crisis across the union that the real problems can be tackled.

It is critical that we help the long-term unemployed, and it is just as vital that employers are given all the assistance that can be offered to protect jobs, and produce new ones.

Mr Kenny has made an honest attempt to maintain the narrative that we are doing all that is within our grasp.

He faces a Sisyphusian task rolling a recovery package up such a debt mountain.

However, the Government to its credit has begun the task of laying down a growth path.

There were no eureka moments at yesterday's announcements. We got a series of practical and pragmatic steps aimed at encouraging spending and getting people back to work.

Both are laudable objectives, and given the constraints with which we are confronted they should not be criticised for lack of imagination or creativity.

The €500m raid on pensions is certain to be the most contentious part of the package.

The attempts to lure people away from the dole and get them back to work by financial inducements are overdue.

Sceptics will undoubtedly see 20,000 training places with a jobless total of 440,000 as a drop in the ocean. However, such an easy dismissal would be glib.

The IMF and ECB are watching and perception is important. The more we do to help ourselves the more authority we have to press our case. Businesses will certainly welcome the cuts in VAT and PRSI. Arguably, the commitment to a micro finance scheme for small business, and the undertaking to reduce red tape, may in time turn out to be the most significant parts of Mr Noonan's plan.

Many regard it as a fiction that we can manage our way out of this crisis. They argue persuasively that the current debt levels are unsustainable. They point out that no country has ever succeeded in cutting its way back to growth, as prescribed by the EU and the IMF.

That is why it is so critical that a dual approach be adopted. It is essential that the debt virus which has become a pandemic right across the EU is acknowledged and dealt with.

Taoiseach Enda Kenny and Finance Minister Michael Noonan have an obligation to demand as much in Brussels.

The fact that Angela Merkel and Nicolas Sarkozy have chosen to forestall looking these fears in the face until they have held elections is not good enough.

The ideals that were the cornerstone of the union ordain that the concerns of each member state would be given due weight.

Thus delaying until 2013 any consideration of debt restructuring seems almost delusional considering unfolding events in Greece.

Must we wait for a default by a member state which is widely regarded as inevitable and then deal with toxic fallout?

Would it not be in all of our interest to insist that the debt tsunami which has already engulfed a number of states, and which threatens to sweep the entire union, be addressed by the bloc?

The American magnate Lee Iacocca observed that "the trick is to make sure you don't die waiting for prosperity to come".

Today the Government's own think-tank, the ESRI, recommends that Europe should shave off as much as €50bn from our debt.

Speaking on behalf of the organisation Joe Durkan said: "What is needed is a fundamental solution."

What the Government attempted yesterday was not to deliver a "solution" but it was a statement of intent, nonetheless.

Irish Independent

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