Weary citizens deserve not to face full force of another round of cuts and taxes
We have demonstrated sufficient good faith to be allowed to decide for ourselves how to reach the required deficit target
So October’s budget must ensure that our general Government deficit in 2014 does not exceed 5.1 per cent of GDP. That is the bottom line. Taking that as a given, as far as I am concerned, the troika cannot dictate the scale of the adjustment in October’s budget. I believe Ireland has demonstrated sufficient good faith in getting our public finances on the right track in recent years to be allowed to decide for ourselves how we achieve the required deficit target in 2014.
It is true that we cannot be certain at this stage of the exact quantum of adjustment required to stay within the deficit limits. The stability programme update submitted by Government to the European Commission in April this year tells us that an adjustment of €3.1 billion in the budget will yield a deficit figure of 4.3 per cent in 2014 – well below the limit of 5.1 per cent.
I accept that we have a lot of moving parts – principally some worrying emerging data on economic growth – and that it is not possible to finalise the fiscal adjustment until September. Having said that, at this remove I believe we should be aiming for a deficit a little south of 5 per cent. This will involve an adjustment of less than €3.1 billion. It is too early to say how much less than €3.1 billion.
However, it is likely that an adjustment between €2 billion and €2.5 billion would meet this deficit objective.
In an effort to boost growth, there also needs to be an acceleration of the strategic investment fund. The long-promised investment projects need to come on stream. It is nothing short of a disgrace that two years on from the announcement of this investment fund, the enabling legislation has still not been brought before the Oireachtas. With 419,200 people still on the live register, unemployment remains the single biggest crisis facing the country.
Reducing the adjustment by several hundred million euro might not make an enormous difference to the economy. However, for our austerity-weary citizens it could make all the difference indeed.
Michael McGrath is the Fianna Fáil spokesman on finance and a TD for Cork South Central