Today’s ESRI Quarterly Economic Commentary has thrown an uncomfortable spotlight on the cosy consensus view amongst the government parties, Fine Gael and Labour that Ireland must reduce its budget deficit to 3% by 2014. Like Sinn Féin the Institute has recommended extending the deadline to 2016.
The report also sends a serious signal to the international community that Ireland is ready to face up to its problems. Sinn Féin is the only party to argue that the 2014 budget deficit reduction would stifle growth and deepen the unemployment crisis. Sinn Féin has consistently and calmly argued for a more realistic target of 2016. Labour and Fine Gael have fully supported the government’s sleeveen approach of agreeing to the 2014 deadline in the full knowledge that it cannot and will not be achieved. This is exactly the type of bankrupt politicking that has brought Ireland to its knees.
Year on year since the economic crisis began the government has rigidly stuck to its austerity model whilst indebting future generations by pumping tens of billions into Anglo, a bank with no systemic value to the Irish economy. As far back as 2008 Sinn Féin published a policy document advocating an economic stimulus model to halt Ireland’s spiralling unemployment and promote growth. Each year in advance of the Budget we have presented to government costed alternative economic plans based on job creation, taxation justice, and end to wasteful expenditure and a sensible deficit reduction timeline.
EU Economic Commissioner Oli Rehn’s reaction to the ESRI report was informative. He stated through his Spokesperson that ‘only the EU Council can change the four year target’. Earlier this week Angela Merkal and Nicolas Sarkozy stood shoulder to shoulder in their demand for a revision of EU Treaties so as to install permanent measures to ensure peripheral member states manage their finances as told by larger states such as France and Germany. Their “Deauville Declaration” goes so far as to demand the EU suspend voting rights of member states who breach budget rules. On Monday EU Finance Ministers at a Budget Review agreed new procedures to impose financial sanctions on government’s who ‘persistently’ breech EU budget rules.
What is deeply worrying about his response is that the current Irish government along with the Fine Gael and Labour ‘government in waiting’ has completely surrendered to the EU’s budget reduction deadline of 2014 and thus it’s one size fits all fiscal management model.
Of course such a massive submission makes absolutely no sense for Ireland’s economy. It may suit Berlin’s balance sheet but surely even the EU Apparatchik’s must realise that without growth Ireland cannot pull itself out of the current crisis. It is also a little painful to listen to Merkel and Sarkozy dictate how EU financial support should be managed in the context that it is their banks history of reckless lending that fuelled much of the financial crisis in Europe. Sinn Féin is not afraid to put its head above the parapet and say stop to the EU nor are we alone is our analysis that growth based on job creation must be any government’s number one objective when making budgetary decisions.
