| 13.2°C Dublin

Five things Brian Lenihan must do to save our economy

THE Government's current economic and financial policies are clearly not working. Irish bond yields soared again this week as international investors demanded an ever-higher premium to hold Irish Government debt. In short, we're in dire financial straits. Here are five radical steps Lenihan must take:

1 Cut taxes: In his three Budgets since becoming Finance Minister 28 months ago, Brian Lenihan has raised taxes by the equivalent of more than €5bn a year.

And guess what? The tax take has fallen as people either decide it's not worth their while to earn more money or instead opt for the black -- ie, cash -- economy.

Lenihan needs to start thinking outside the box. If raising taxes has failed to raise the tax take, mightn't a cut in taxes increase the take? In his next Budget on December 7, Lenihan should announce a sweeping programme of tax cuts including income tax and levies, excise duties, VAT, local authority rates and other government charges.

It would boost the economy and reduce the cost of doing business in Ireland.

2 Close Anglo and Irish Nationwide now: As the second anniversary of the deposit guarantee approaches, it is now clear that guaranteeing the deposits and bonds of Anglo and the Irish Nationwide was a catastrophic error with the total cost of bailing out these two fast approaching €50bn.

While much money has already been wasted on these two rotten banks it's still not too late.

Only about €4bn of the €25bn pledged to recapitalise Anglo has actually been handed over and just €16.75bn of the €36.5bn of Anglo bad loans scheduled to go to Anglo have been actually transferred.

Instead of throwing good money after bad, the Government should walk away now.

3 Tear up the Croke Park agreement: The sweetheart deal with the public sector trade unions, aka the Croke Park agreement, under which the Government agreed to no further cuts in public sector pay or compulsory redundancies all the way out to 2014 is a luxury we can no longer afford.

With average hourly rates of pay in the public sector a massive 47pc higher than in the private sector, it is clear that there is much more bureaucratic fat that urgently needs trimming. And it's not just public sector pay rates.

With underlying public sector numbers having risen from 275,000 to 360,000 between 1997 and 2009 there is also a pressing need to cut the headcount by at least 20pc.

4 Reduce social welfare payments: Even after last December's across-the-board 4pc social welfare cut, the basic weekly social welfare rate in this country is still €196. By comparison the same payment in Northern Ireland and Britain is just £67, just two-fifths of the Irish rate.

This disparity with our nearest neighbour is way, way too wide and needs to be narrowed as soon as possible.

5 Declare war on the professions: While everyone else has taken the pain through job losses, tax increases and wage reductions, the professions party like it's still 2006.

While competition has come, with painful consequences for many people, to the rest of the economy, most of the professions, particularly the legal and medical professions are still a closed shop complete with artificial barriers to entry and ridiculously high fees and charges.

This has got to stop, and stop now. Lenihan must make it clear to the consultants, chemists, GPs, barristers, solicitors and judges that the days of the endless gravy train are over and that the professions must suffer like the rest of us.

If they don't like it then there are plenty of other unemployed professionals, both in Ireland and overseas, who would be prepared to do the job for a fraction of the current rate.