THE GOVERNMENT has reiterated its plan for severe cuts in next month’s budget, despite further planned work stoppages in the public sector and a one-year extension by the European Commission in the timetable for restoring the public finances.
The one-year extension by the commission was described by a Department of Finance spokesman as “not in any way an invitation to ease off on necessary and urgent” budgetary adjustments.
“The impact of this is to lessen the action that might need to be taken in later years. It does not obviate the need for us to act now,” the spokesman said.
He emphasised that delaying the necessary action was not an option as that would require harsher measures to be taken later. It would also result in ever-increasing amounts of Government resources being used to service the mounting debt.
In the Dáil, Taoiseach Brian Cowen said social welfare could not be immune from the budgetary adjustment which would have to be made on December 9th.
“If we do not make the adjustment, the prospect of a sustainable level of service provision for people dependent on social welfare would be put at greater risk and a greater adjustment would have to be considered in the future,” said Mr Cowen.
In Brussels, EU monetary affairs commissioner Joaquín Almunia justified the one-year extension in Ireland’s timetable for budgetary adjustment in the light of the unexpected scale of the economic downturn affecting the country.
He emphasised that the Irish authorities must act to correct the imbalance in the public finances.
“How this correction is spelled out in concrete measures in the revenue side or in the expenditure side belongs to the responsibility of the national government.
“It’s a good question for Mr Lenihan. But, on the other hand, I think he’s doing a very good job.
“The deterioration of the Irish economy in terms of contraction of the GDP is the biggest in the euro area. But I have to say also that the reaction of the authorities, the decisions adopted, the determination to pursue an adjustment process, to reduce imbalances and put again the Irish economy in a good perspective of sustained growth, is the highest in the euro area also,” said Mr Almunia.
Pre-budget estimates due to be published today by the Department of Finance will forecast a further contraction of 1.5 per cent in the economy next year, after a shrinkage of 7.5 per cent this year.
According to the estimates, the budget deficit will be 12 per cent of GDP, assuming the Government achieves savings of €4 billion in the budget.
About 3,500 people took part in a protest in Dublin yesterday organised by the 24/7 Frontline Services Alliance. The marchers included gardaí and nurses who oppose proposed cuts in the allowances they receive on top of basic pay.
The alliance is planning to escalate its campaign from the weekend. They will ask every TD to declare publicly their position in relation to possible cuts in pay or allowances.
It emerged last night that the Government is facing the prospect of a number of stoppages by staff across the public service in the weeks ahead.
Public service staff are already planning a nationwide one-day strike on November 24th. However, union leaders warned yesterday that further industrial action could take place.
During the planned strike on November 24th, public sector unions will only provide emergency cover.