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... so, what's the economic view in Dublin?

By Brendan Keenan

Published 10/05/2016

The politicians were off playing game of thrones, and the voice of the mandarin was heard in the land. That at least is one interpretation of the recent spring statement on the budget outlook.

The tone was very different from the election manifestos of just a few weeks before, but it is largely a matter of tone. The problem has been reconciling manifesto policies with these numbers.

Fine Gael, you may recall, got into particular trouble with this because of different interpretations of "fiscal space".

The darn thing raised its head again the other day, with convoluted explanations of how the conversion of AIB shares might increase fiscal space. Time, perhaps, for a bit of simplicity - even simplification - to help get a grip on reality.

That grip seems to be weakening. Another significant step down the Greek Bog Road has been taken by the Irish Water deal. The road is the one where everybody gets what they want, and nobody pays for anything.

More often than not now, policies are simply announced without any organisation or resources to make them work. We are already seeing the baleful results in the expansion of free childcare and free GP treatment for children. Neither is capable of effective delivery because it was all done on the back of an electoral envelope. The probable result is damage to both services.

The enumeration of risks in the spring statement received a lot of attention - almost as much as the cheering forecast that the economy will grow by 5% a year in cash terms for the next five years. Here, it seemed, was the authentic voice of the department. It knows that achieving those growth figures requires that none of the risks come to pass; starting with a Remain vote in the June UK referendum.

But even if things turn out as well as that, a simple glance at the figures helps show why politicians have become so fond of empty policies, and also why it is so dangerous. There is no fiscal space for foolhardiness.

Somewhat less simply, it has to be pointed out that the statement is based on no changes in policy (that's the government's new job), except that there is €400m a year to raise tax bands in line with earnings, an allowance for "demographics" (mainly pension costs), a €5bn annual capital programme and the commitments already made under the Lansdowne Road agreement.

Belfast Telegraph

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