John Bruton: Ireland faces 10 more years of austerity budgets

Former Taoiseach says only 30 per cent of Ireland’s debt is from bank bailout

File image of former taoiseach and Fine Gael leader  John Bruton TD, speaking at a Young Fine Gael event in Galway.  Photograph: Eric Luke/The Irish Times

File image of former taoiseach and Fine Gael leader John Bruton TD, speaking at a Young Fine Gael event in Galway. Photograph: Eric Luke/The Irish Times

 

Former taoiseach John Bruton has predicted that Ireland could have another 10 years of austerity.

Mr Bruton said the Irish people themselves had passed a referendum on the EU Fiscal Compact treaty which commits Ireland to reducing the debt/GDP ratio from 120 per cent to 60 per cent.

That referendum was passed by an almost two to one margin in 2012.

He warned that unless economic growth “accelerates incredibly”, Ireland will have to run budget surpluses in the coming years.

He told RTÉ radio presenter Sean O’Rourke earlier that that Irish governments in the years ahead should not create a sense of false hope.

“The biggest mistake you can make in politics is to promise something that you can’t or won’t deliver,” he said. “That’s why it is important to refer back to the limitations that are there.”

Mr Bruton said the Department of Finance own figures showed that budget surpluses will have to be run to get the debt down.

He maintained that the “totally unsustainable” spending of the previous Fianna Fáil Government based on construction revenues had not been completely wound back and more fiscal consolidation is necessary.

He maintained the fiscal restraints are not all down to the bank bailout which is 30 per cent of Ireland’s total debt. The rest is money spent on day-to-day spending.

Mr Bruton said he had written to the EU President José Manuel Barosso two years ago insisting that foreign banks had been partially responsible for the Irish bubble and should take some of the burden of it too.

However, he warned that it was still important that the State take responsibility for the 70 per cent of the debt that comes from it. Financial markets were “extremely fickle” and therefore the State had to be responsible, he explained.

He praised the Government for sticking to its fiscal targets and said it had garnered “tremendous credibility” overseas.

His stance was criticised by the Minister for Justice Frances Fitzgerald who accused him of presenting a “depressing message for people” and that he was being unduly pessimistic.

She said the key to economic growth will be the faster creation of jobs.

“I would say that, as jobs continue to be created, people will begin to feel the difference,” she said. “The focus on job creation has to be central to everything that we do.”

Mrs Fitzgerald put the poor showing by the Government parties down to the worries that people have over making ends meet.

While people understood on principle that tough decisions had to be made, she said it was understandable that they were worried on an individual level about the bills they will now face.

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