Debt Mountain and EU Fiscal Rules will result in further decade of stagnation without major growth boost
In a statement responding to the publication of the government’s Medium-term Economic Strategy, Richard Boyd Barrett TD, Finance spokesperson for the People Before Profit Alliance has described the document as “wildly optimistic,” given Ireland’s enormous debt, the requirement to meet EU excessive deficit and fiscal rules and the persistent failure of all previous growth forecasts to materialise.
Deputy Boyd Barrett said the requirement to pay billions in interest on Ireland’s debt mountain was robbing the country of the funds it needed to deliver substantial economic growth and would likely result in a decade of stagnation or low growth.
Deputy Boyd Barrett said also that there were worrying signs that the government was now complicit in stoking up a new property bubble by introducing tax incentives to property speculators.
Richard Boyd Barrett said: “Really, this growth strategy document is more government hype but with very little evidence to back up its assertions. To date almost every forecast made by the government about a return to growth has been proven wrong – always wildly optimistic about growth that then fails to materialise. This is because the government consistently fails to acknowledge the scale of damage that is being done to the economy as a result of the brutal austerity measures they are imposing.
Crucially, the government simply cannot face up to the fact that the level of investment required to stimulate significant and sustained growth must come from the state and this cannot happen while up to €9 billion is being forked out in one year alone in interest on an odious debt.
The funds we need to stimulate real growth are being sucked out of the country in debt interest and will continue to be for at least a decade because of EU deficit procedures and fiscal treaty rules on debt. That is a recipe for economic stagnation.
The government imagine private investment is going to come charging over the hill to rescue the economy and deliver the growth but that is highly unlikely and will never be enough to deliver the sort of boost that could significantly lift the economy.
Typical of the bankruptcy of the government’s strategy is the emerging property bubble in Dublin. The government, incredibly, are incentivising renewed speculation in the property sector. If this is how they think you help an economy recover and move to a sustainable path – they must be out of their minds. This is not sustainable investment – it’s another accident waiting to happen.
Even the Troika and the Irish Fiscal Advisory Council have warned that all the risks to growth are on the “downside.” Yet the government’s document only puts forward two scenarios – one optimistic and one wildly optimistic. Oddly they have included a “down-side” scenario even though that’s what IFAC and the Troika have said is more likely.
So, as is often the case with this government, spin and hype has triumphed over clear-headed analysis.”