The Irish economy, so beloved of the British Right, is in dire straits compared to our own, with unemployment at 12.5pc, GDP down 7.4pc and deflation at -6.6pc.
As Alistair Darling delivered yesterday’s PBR with the themes of investing in growth, taxing fairly and safeguarding the recovery, quite a different budget was delivered in Ireland.
Finance Minister Brian Lenihan announced further cuts in spending and welfare benefits, at his third budget in 12 months. Large scale tax rises have already been announced.
The measures were praised by Tory bloggers and politicians and gave a taste of what a future Tory budget might look like. George Osborne has long been a supporter of Irish policy, stating in February 2006 that:
“Ireland stands as a shining example of the art of the possible in economic policy-making.
“With its vision of a highly-educated, innovative, open, dynamic, low-tax economy, and relentless focus on the long-term drivers of prosperity, Ireland’s economic miracle has shown that it has the right answers to the challenges of the new global economy.”
Iain Dale writes that:
“The PBR the British Chancellor should have delivered, was delivered yesterday in Dublin. Hopefully George Osborne is studying it in great detail.”
The results of Ireland’s policy are plain to see:
• Irish unemployment is 12.5 per cent;
• The country is experiencing deflation at –6.6 per cent;
• GDP has fallen 7.4 per cent over the past year and 10.5% from its peak;
• And despite the cuts they have still had their credit rating downgraded.
But what exactly are the measures that the Tories are so keen to praise?
– Child benefit is being cut by 10%.
– Unemployment benefit is being cut by 4.1%, with larger cuts for those under 25.
– Public Sector workers are facing pay cuts of 5-8%.
– Prescription charges are being increased by 50%.
– Other increased health charges including A&E, inpatient and outpatient charges and a higher monthly threshold above which people cannot get free drugs under the Drug Payment Scheme.
– The Health budget is being cut by €400mn on top of previously announced cuts
– Further departmental cuts will be announced in coming days.
– €960mn is cut from the investment budget
All the world’s major economies have had their public finances damaged by the global recession. And now all must take steps to rectify them. Alistair Darling made the tough choices necessary to halve the deficit over the next Parliament yesterday and did so guided by the principle of fairness.
The Irish, egged on by the Tories, have instead opted to attack the poorest in society; as Irish Labour Leader Eamon Gilmore has said:
“This is a budget that is viciously anti-family, fundamentally unfair and socially divisive.
“Everyone knew that a tough budget would be required because of the unprecedented economic shambles created by Fianna Fail over the past twelve years, but few people could have anticipated a budget that would be so lacking in fairness.
“The reduction in child benefit will hit the incomes of most families in the country. An across the board cut in child benefit will hit to [sic] low to middle income families particularly hard and runs the risk of plunging even more children into poverty”
Credit Suisse’s Head of Asset Allocation, Michael O’Sullivan has commented that:
“Arguably the Irish bond market is being saved at the expense of Irish society.”
O’Sullivan, 38, author of a 2006 book on Ireland’s economy, added in the interview at Bloomberg’s London bureau that:
“By cutting spending you lower the trend line of growth and store up bigger fiscal problems down the line.”
The economic and social disaster occurring across the Irish Sea is an important reminder of exactly what Osborne’s plans mean.
39 Responses to “Irish budget cuts praised by British Tories but criticised at home”
The Sliver Party
Irish budget cuts praised by British Tories but criticised at home http://alturl.com/ommg
Liz McShane
Anon – Vested interests? If you mean representing and protecting the lives & outcomes of lower paid workers etc then yes. But it is hardly the same type of vested interests as big business and certain property developers and bankers who seemed to have escaped to sunnier climes.
Henry
Let’s remember that in 1979 the Tories spent the election campaign denying they’d vastly increase VAT (a ‘Labour Lie’) – then did precisely that when they formed a government. Attacking the poor, as Guido put it.
Anon E Mouse
Liz – On the lower paid workers you’re preaching to the converted.
As for the bankers in the UK escaping to sunnier climes remember our government is the one who bailed the banks out.
I have a theory Liz. The banks profits/long term sustainability collapses due to dodgy overseas investments. The shares drop in value. They get bought by a more powerful bank.
It used to be called Capitalism and it’s a shame the markets weren’t just left alone. Then we wouldn’t own banks as taxpayers.
I want my taxes to pay for hospitals, schools, armed forces. police forces – whatever. I do not want to own any banks.
Your main point though – I disagree with the union opinion. We don’t live in a Soviet state – hard to believe with Brown at the helm I know but how long can we keep recklessly racking up the debt?
The poor will have to pay it back Liz I guarantee it.
Anon E Mouse
Henry – Quite agree with you. Most people don’t realise (overall) taxes were higher and went UP under the Tories…