SOCIAL PARTNERS:THE DECISION by the incoming government to tackle the budget deficit in a short time may send the economy into a deflationary spin, Ictu general secretary David Begg has said.
He had advocated the budget deficit be brought back to 3 per cent of GDP in the period to 2017.
"Under my idea you would graduate the programme of consolidation over that period of time and try to ensure that you didn't so damage the economy in the deflationary sense [so] that economic growth couldn't take hold," Mr Begg said on RTÉ radio's News at One.
“The difficulty in front-loading it in the first two years is that it imparts quite a deflationary shock to the economy . . . What happens to growth?”
He said recent VAT returns revealed a depressed local economy at a time when exports were recovering.
He believed Europe needed to offer Ireland some relief relating to bailout repayments. “There is no point in anybody just killing the goose. If we can’t pay the money, we can’t pay the money.”
He welcomed the fact that planned cuts to public service jobs would be voluntary. However, he said many people had spoken about preserving frontline jobs, without specifying exactly what a frontline job was.
Separately, Social Justice Ireland welcomed the fact that the programme for government featured a commitment not to reduce social welfare rates and the reversal of the cut in the minimum wage.
Fr Seán Healy, director of Social Justice Ireland, said that while the programme contained “very welcome commitments on some issues” it was “very vague” on others.
“It contains very few numbers or target dates. Its implementation will be very dependent on the EU-IMF bailout agreement being renegotiated,” he said.
