Is an affronted and ashamed Irish parliament about to do to its 2011 budget what an affronted and ashamed US Congress did to Tarp – throw it out at the first time of asking? The nominal sums may be different, but the comparison is not facile. At stake in Washington in November 2008 was the future of the tottering US banking system. At stake in Dublin on December 7 is the future of the eurozone.
Ireland has unveiled an austerity package – a four-year, €15bn programme of tax rises and spending cuts billed as “The National Recovery Plan 2011-2014”. It aims to reduce the deficit to 3 per cent of gross domestic product by 2014, and assumes that real GDP will grow by 2.75 per cent annually between 2011 and 2014. That is a huge and hopeful bet on the global economy. The political brouhaha concerns the €6bn adjustment slated for next year. Tarp was eventually approved. Common sense will surely also prevail in Ireland. This budget must pass.
The debate has an absurdist tone worthy of Samuel Beckett. Ireland has little room for manoeuvre: if its politicians do not implement the austerity measures, the European Union and International Monetary Fund will do the implementing for them. The public has already faced €14.6bn of budget adjustments since mid-2008; the scale of economic retrenchment implied by the latest programme is best illustrated by the capital spending figure, which is set to fall 43 per cent over the four-year period to a level barely one-third of what it was two years ago.
