The View from Dublin - Ahern fails to follow Osborne
‘Tapioca futures weaker’. Bet that made you sit up and take notice. In fact, it was an example of how not to do it in a Financial Times newsroom campaign many years ago to improve the standard of headlines.
I felt a bit sorry for the guy, or gal, who produced it. After all, what are the options if you are covering the tapioca market? But things have improved since my time. The newly-designed FT came out tops in the headline stakes on Chancellor George Osborne’s autumn financial statement: “Osborne swaps the axe for tax.” Mr Osborne was forced to row back on plans to scalp working tax credits which, as this column noted some time ago, are expensive, but effective, in doing things both Right and Left advocate — making work attractive and reducing poverty.
So there had to be new taxes to cover the shortfall. But not all of it. I was struck by analysis from the Office of Budget Responsibility (OBR) that the changes meant government borrowing would be £20bn (€27bn) more over the next five years than had originally been planned.
It was not so much the figure that was striking — although it was striking enough. The OBR calculated that the new statement implied real spending cuts would be less than two-thirds of those delivered over the last parliament, and about a third of those pencilled in by the previous, coalition, government in March.
What really hit home was to see such politically charged comments appearing almost immediately after the statement — calculations which clearly imply that Mr Osborne was doing the Tory talk, but not the Tory walk.
This is a new game, where finance ministers know that what they say they can be authoritatively contradicted, and things they prefer not to say pointed out.
Even so, one might not have paid too much attention (although the Stormont agreement means an even bigger spending relaxation in Northern Ireland), were it not for a happy coincidence. The British statement, which covers spending over the medium term, was on November 25. A day later, the Republic’s equivalent of the OBR, the Irish Fiscal Advisory Council (IFAC), produced its assessment of the October Budget and threw an even larger lump of political fat into the fire.
Both bodies were formed around the turn of the decade, but with somewhat different origins and remits. David Cameron’s Conservative Party made an election promise to set up an independent body after it became clear how imprudent Gordon Brown had been with the public finances.
Ahern recklessness produced no such plan from Irish political parties. The council is a child of the troika, although such bodies are now a general part of the Eurozone maze of fiscal scrutinies.