Cantillon: Austerity stays put like an unwelcome guest

The release of the Maastricht returns for 2012 on the same day as senior Government figures were signalling an end – or pause at least – to austerity was coincidental but also significant.

The standardised European measure of the State's Government debt and deficit released by Eurostat summarises in a few figures the arguments for and against austerity and may also indicate where the Government's true intentions lie.

Taken at face value the figures are an endorsement of austerity.

The general Government deficit came in at 7.6 per cent of GDP, well under the 8.86 per cent target set under the terms of the EU-IMF bailout.

However, a number of one-off factors contributed to this, including the sale of mobile phone licences.

The one-off nature of these gains, combined with the expected absence of other non-tax revenues this year, has seen the Department of Finance leave its forecast for the 2013 out-turn almost unchanged at 7.4 per cent.

Even allowing for some judicious expectation management, this still leaves a big gap between the 2013 out-turn and the 3 per cent target set for 2015.

It is hard to reconcile closing this gap with talk of a 2014 budget that will ease off on austerity and bring in tax concessions for middle-income earners.

The anonymous Government Minster making the comments seemed to think that interest and capital savings, on the IBRC promissory notes and the EU portion of the bailout loans, could provide the necessary wriggle room. However, it is only April and that money seems to have been spent five times over.

The other variable that could significantly alter our debt dynamics is growth.

Once again, a significant improvement has been predicted by the Government in 2014, but that dog has yet to bark.

Barring some rabbit being pulled out of the hat, the numbers indicate that much, and, though we would wish it otherwise, austerity will be here for a while longer.