Thursday 19 July 2018

Decisive first steps to recovery

IT has taken almost two years but, on the evidence of last week's courageous Budget, the Government is finally getting to grips with the economic crisis that has engulfed the country. For the first time since Brian Cowen became Taoiseach, it is now possible to say that we have reached the end of the beginning of this recession and that there is now a plausible plan in place for the recovery. It will be a long hard road, but Brian Lenihan, the Minister for Finance, took the first decisive steps last Wednesday when he introduced a Budget that tackled head-on the disarray in the Government's finances.

It was, according to the Financial Times, a masochistic Budget, but an essential one. The pain caused by this Budget, and the previous attempt last April, will be felt by everyone in this country. Public servants have been hit particularly hard; already stung by April's pension levy, they must now stomach a pay cut. Their anger is understandable, but the Government had no choice but to cut. Recession has reduced the size of the Irish economy and has forced the Government to reduce the size and cost of the public sector. Total tax receipts this year will not come close to meeting the combined cost of public sector pay and social welfare, so it was essential that both bills were reduced.

According to today's opinion poll, a significant majority of voters now believe that Mr Lenihan, and not Mr Cowen, is actually in charge of the Government. They also believe that the power of the public sector unions has been broken and that the Garda Siochana should not contemplate strike action. In truth, it does not matter who is guiding government decision-making, so long as the right decisions are being taken. Most importantly, the dithering and indecision of the previous weeks and months was replaced by a clear-headed Budget that pulled few punches.

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