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So what's the view from Dublin?

By Brendan Keenan

Published 20/10/2015

Growth forecasts are the one part of the Budget which require external endorsement — by the Fiscal Advisory Council.

On policy, it can only give its opinion. As it happens, the council’s opinion sparked just about the only debate on budget policy — as distinct from budget goodies. This was its claim that the government’s spring statement did not conform with either the spirit or the letter of the new EU rules — and new Irish laws — for controlling government borrowing.

It acknowledged that, while open to criticism, the spring statement is a great improvement on the past. It sets out, early in the year, the Government’s assessment of its fiscal space, or, in the usual language of budget debate, “how much it had to give away”.

That was €1.2bn-€1.5bn. The council thought that even the lower figure did not meet the rule which says the underlying deficit must fall each year by 0.6% of GDP. The governing class shows little enthusiasm for making such matters a central part of national politics (admittedly, it is difficult stuff), but there was some sense of people waking up to the fact that we are supposed to be playing a different game than in the past.

It is strange. One might think that a country which has been brought to the brink of ruin would be determined to scrap every vestige of the old game. Instead, the obsession with banking has blinded most people to the fact that the inability to deal with the underlying state of the public finances, rather than their annual performance, itself brought ruination.

After this reasonably sophisticated spring sparring, monthly good news from the Exchequer returns brought back the old game — how much would 2015’s  revenues amount to, and how should they be distributed?  What is needed, though, is a separation of the two reasons given — reducing the debt burden and  avoiding boom-bust cycles. The first can be achieved in time, the second is a permanent challenge.

Belfast Telegraph

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