Signs of Coalition losing nerve as winning post looms
Labour under pressure from those who opposed participation in government in the first place
Members of unions and opposition groups calling on the public to join an anti-austerity People’s Assembly on Wednesday. “The public is hardly likely to give Labour much credit for avoiding some unknown potential cuts that might otherwise have been implemented.” Photograph: Alan Betson
The Coalition has performed solidly for the first half of its term in office but faces important tests in the coming weeks that will determine whether it ultimately succeeds or fails in the great challenge it took up in March 2011.
The overwhelming task facing the Coalition from the start was to nurse the economy back to health and there is no denying its achievements to date on that front. The country is on course to exit the EU-IMF bailout by the end of the year and the tide is slowly but surely beginning to turn on unemployment.
One last really tough budget will be required to keep on track but there are worrying signs of a loss of nerve just when the finishing post is coming into sight.
Tánaiste Eamon Gilmore has given a hostage to fortune with his declaration that the €3.1 billion adjustment target agreed with the troika should no longer apply. He correctly pointed out that the targeted percentage reduction in the national debt can be achieved with cuts of less than €3.1 billion but by publicly committing himself to that position he has created two problems for himself.
The first is that he will suffer a serious loss of face if he doesn’t manage to get an adjustment of significantly less than €3.1 billion. Whatever their reservations, his Coalition partners in Fine Gael will probably be willing to help him out as he has been a loyal colleague in government, but the troika may not be as accommodating.
While the troika has less influence now that the country is on the verge of exiting the bailout, its strictures still cannot be ignored, particularly as its approval is needed for access to any stopgap emergency funding that might be required in the future.
The international money markets will also take note of any significant watering down of its commitments by the Government the moment that the troika discipline begins to be relaxed and that could lead to higher than expected interest rates on future borrowings.
The Fiscal Advisory Council, one of the institutions established to ensure that the mistakes of the boom are not repeated, has strongly advised the Government to stick to the €3.1 billion target. Central Bank governor Patrick Honohan did so more obliquely in an article in The Irish Times earlier this week.
Politically it does not make a great deal of sense for Gilmore to risk so much on whether the adjustment is going to be €3.1 billion or, say, €2.8 billion. One way or another there are going to be serious spending cuts in the budget and the public is hardly likely to give Labour much credit for avoiding some unknown potential cuts that might otherwise have been implemented.
One of Labour’s recurring dilemmas in office is that it is always subject to sustained criticism from a range of voices on the hard left who oppose its participation in government in the first place. Trying to appease these forces means the party often gets little or no credit from the public for the things it manages to do in office.