Ire­land nears end to aus­ter­ity mea­sures

Viet Nam News - - Insight -

By Conor Bar­rins DUBLIN — Ire­land is mov­ing closer to a switch away from deep aus­ter­ity mea­sures as it pre­pares for a key bud­get – the first since the eu­ro­zone na­tion emerged from a mas­sive in­ter­na­tional bailout.

Min­is­ter for Fi­nance Michael Noo­nan is pre­dict­ing the Ir­ish econ­omy to do bet­ter than ex­pected this year, mean­ing fewer cut­backs to state spend­ing and a re­duc­tion in tax rises.

The govern­ment had fore­cast in April that a 2- bil­lion- euro (US$2.69 bil­lion) ad­just­ment was re­quired in Oc­to­ber’s bud­get, to reach a deficit tar­get of 3 per cent of gross do­mes­tic prod­uct (GDP) in 2015.

But Ire­land’s strong growth re­cov­ery means a smaller pack­age may now be enough.

“We’ll get un­der 3 per cent now by mak­ing less cut­backs and less tax in­creases,” Noo­nan said last week.

“It won’t be two-bil­lion- (eu­ros). It’ll be some­thing less.” Debt­plagued Ire­land be­came the first of the bailed-out eu­ro­zone na­tions to exit an EU- IMF res­cue pro­gramme last De­cem­ber – three years af­ter seek­ing help to keep its econ­omy from col­laps­ing com­pletely.

As part of the res­cue deal, Ire­land agreed to painful aus­ter­ity mea­sures in­clud­ing spend­ing cut­backs, state as­set sales and tax hikes.

Since 2008, there have been tax in­creases and spend­ing cuts in seven con­sec­u­tive bud­gets amount­ing to al­most 30 bil­lion eu­ros as the govern­ment sought to bring out­go­ings in line with in­come.

Spec­u­la­tion is grow­ing that Dublin will ease the tax bur­den for low – and mid­dle-in­come fam­i­lies, who have borne the brunt of the tax hikes in­clud­ing con­tro­ver­sial new prop­erty and wa­ter taxes. con­sumers and put some dis­pos­able in­come back in their pock­ets,” said Ger­ard Brady, an econ­o­mist at busi­ness lobby group Ibec.

“It’s not just about the size of the ad­just­ment but how they do it as well.

If they do it right it could give a boost to the con­sumer econ­omy, which we badly need,” he added.

Out­side of Ire­land how­ever, there are calls for Dublin to stick by its 2-bil­lion-euro fis­cal ad­just­ment.

Both the In­ter­na­tional Mone­tary Fund and the Euro­pean Com­mis­sion – which pro­vided the bulk of Ire­land’s 85-bil­lion-euro bailout – have called on Dublin to main­tain the sta­tus-quo.

But with Dublin adamant that a smaller ad­just­ment is needed to meet the deficit tar­get, bud­get day on Oc­to­ber 14 could fi­nally mark an im­por­tant turn­ing point in a six-year bat­tle to re­pair the em­bat­tled econ­omy.

In the midst of the cri­sis in 2011, Prime Min­is­ter Enda Kenny’s cen­tre-right Fine Gael party swept to power as the se­nior part­ner in a coali­tion with the cen­tre-left Labour.

De­spite Ire­land ex­it­ing the bailout and signs of re­cov­ery, both par­ties suf­fered heavy losses in May’s lo­cal elec­tions – caus­ing the Labour leader and deputy prime min­is­ter, Ea­mon Gil­more, to re­sign.

That in turn has led Kenny and the new Labour leader, Joan Bur­ton, to reshuf­fle the cabi­net with 18 months un­til Ire­land must hold its next gen­eral elec­tion.

“Apart from aus­ter­ity-fa­tigue, there ’ s a lot of talk about the econ­omy im­prov­ing but peo­ple aren’t feel­ing it in their pock­ets,” con­cluded Mary Re­gan, po­lit­i­cal edi­tor of the Ir­ish Ex­am­iner news­pa­per.

Ahead of elec­tions, “ it is recog­nised that there is a po­lit­i­cal im­per­a­tive not to im­pose as much aus­ter­ity,” she said. —

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