Europe 'amazed' at steps taken in budget - Lenihan

 

MINISTER FOR Finance Brian Lenihan has said the recent budgetary steps taken in imposing the pensions levy and raising taxes had impressed and “amazed” other European countries.

Speaking at the Irish League of Credit Unions conference in Killarney on Saturday, Mr Lenihan said other European governments would not have been able to impose the kind of pain the Government had.

Mr Lenihan said there would be “riots” in France, were the pension levy on public servants to be introduced in that country.

The steps taken to stabilise the public finances had ensured the Government spending deficit had not drifted to as much as 15, 16 or 17 per cent of GDP, he said.

Mr Lenihan also spoke of the warm praise in the British press recently for the Government’s decisive action, and criticism of the British chancellor for not moving faster in the recent budget there.

He said the global downturn, “the most serious financial crisis since 1929”, had disproportionately affected Ireland’s small, open economy, thereby “compounding our own difficulties”.

Cumulatively, the steps taken by the Government on public finances had ensured the deficit had been “reined in to 10.5 per cent of GDP”, he told delegates.

Stabilising the public finances to return overall Government spending deficit to below 3 per cent of GDP by 2013 was central to the strategy.

“It is essential that we must not lose sight of our strengths which have contributed so significantly to the enormous economic and social progress over the past 20 years,” Mr Lenihan said.

One of the country’s big strengths was its educated, flexible and adaptable workforce.

“The steps taken had impressed our partners in Europe, who are amazed at our capacity to take pain,” Mr Lenihan said.

“This economy will renew and recover and advance. We are going back a few years – we are not going back to the bad years of the 70s or 80s,” Mr Lenihan said.

Asked to elaborate on the attitude of our European partners to the measures imposed here, he referred to the fact that the Government had managed to introduce the pension levy on public servants. This was a difficult thing for the Government parties to do, “but we have done it”, he said.

“In France you would have riots if you tried to do this,” he said.

The reason for part of the economic decline in some European countries was that governments could not deliver change, he said.

“We had the highest unit labour costs of any country in the euro zone. That is no longer the case.”

What was impressing Europe was that Ireland was showing adaptability, he said. “The view in Europe is that Ireland is taking steps to put her house in order.”

However, he could appreciate the measures weren’t popular.