After more than five years of austerity measures, amounting to some €28 billion, it is scarcely surprising that people are suffering from a degree of austerity fatigue. In the Irish Times/Ipsos MRBI poll, when they were asked whether the Government in the budget on October 15th should meet the target set in the bailout programme – involving a €3.1 billion adjustment – one-third agreed, while one in two favoured making smaller savings.
Tánaiste Eamon Gilmore, has talked about not allowing the Irish economy become an “economic experiment for austerity hawks”. And he has argued strongly for spending cuts and tax rises of less than €3.1 billion next year. These, he claims, would still be sufficient to meet the required deficit target of 3 per cent of GDP by 2015. But although half of all poll respondents also favour taking a similar approach , the Labour Party – which records its lowest rating in some 30 years – has nevertheless lost rather than gained support.
Perhaps after five years of economic hardship, the real surprise is that such a large minority favour fully meeting the requirements of the bailout programme, or making a bigger adjustment. Fine Gael supporters, on balance, back achieving savings of at least €3.1 billion, while even among Labour supporters, the majority in favour of less austerity is slim. The European Commission, in its latest forecast for the Irish economy, suggests the Government is likely to miss its end year deficit target. And, it has implicitly advised the Government to meet the €3.1 billion adjustment target in the forthcoming budget. The Government intends to leave the bailout programme at the end of this year. But the manner of its exit, and whether and how it meets fiscal commitments already made, do matter. And the Government’s budget decisions will influence how the State is subsequently received in international capital markets, when seeking to raise money, at the lowest cost, to finance our huge annual borrowings.