Why do the right continue to support Ireland’s disastrous economic policies?

The British right praised Irish policy before the recession, during the recession and continue to praise it now. They have been consistently wrong.

Free market think tank Reform has named Irish finance minister Brian Lenihan “Reformer of the Week”. Their reason?

“… for announcing a further €4.5 billion in spending cuts and €1.5 billion in tax increases in order to maintain the country’s fiscal credibility.”

This is despite the economic disaster that has been unfolding in Ireland over the past two years. In 2008 Lenihan decided against a fiscal stimulus and instead tried to balance the budget through spending cuts and tax rises.

This strategy has proved self defeating as the welfare bill (despite cuts) continues to rise and tax revenues continue to underperform.

There are now renewed market fears over Irish growth and its ability to service its debts. And yet, despite the mounting evidence that Irish policy is failing, the British right continues to heap praise on their policy choices.

Before the recession George Osborne called Ireland as a “shining example of the art of the possible in economic policy making”. Even as the IMF warned that the Irish economy was “unbalanced”. Even after the recession hit and the long series of austerity budgets began, Tory politicians and bloggers continued to be supportive.

In December last year Guido Fawkes wrote that, due to their austerity budgets, Ireland “will bounce back faster than the UK”. Nearly one year on UK unemployment is at 7.7 per cent whilst Irish unemployment stands at 13.9 per cent. Whilst the UK enjoyed decent growth in Q2 and Q3 this year, Irish GDP contracted again in the second quarter.

The British right praised Irish policy before the recession, during the recession and continue to praise it now. They have been consistently wrong.

23 Responses to “Why do the right continue to support Ireland’s disastrous economic policies?”

  1. Shlomo Pines

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/aiLjoQ asks @DuncanWeldon

  2. Richard Bradley

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/bHlbsc

  3. OldTrot

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/aiLjoQ asks @DuncanWeldon

  4. mark wright

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/aiLjoQ asks @DuncanWeldon

  5. Georgina Vincent

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/bHlbsc

  6. Shamik Das

    Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/aiLjoQ asks @DuncanWeldon on @leftfootfwd

  7. Georgina Vincent

    Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/bHlbsc (via @leftfootfwd)

  8. Duncan Weldon

    RT @shamikdas: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/aiLjoQ asks @DuncanWeldon on @ …

  9. Matt Jeffs

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/aiLjoQ asks @DuncanWeldon

  10. william

    THe diference between the UK and Ireland is that within the euro it would have been impossible to finance the Irish borrowing requirement.Have you not noticed the thoughts of the German constitutional court?The imbalance of the Irish economy was down to incompetent and corrupt politicians.At lest Brown was merely incompetent.

  11. Patrick

    Duncan, read this: http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html?via=mr As an irishman I fear its too late now I’m afraid…

  12. Duncan Weldon

    Patrick,

    I read that. It’s an awful mess.

    I believe the Euro and the ECB have been a disaster for Ireland. I also suspect that the low/negative real interest rates in the decade before the boom explain the vast increase in FDI and the relocation of companies to Ireland far more than the low corporation taxes praised by the UK right do.
    I think some form of partial default is now the only realistsic option.

  13. Samuel Tarry

    RT @shamikdas: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/aiLjoQ asks @DuncanWeldon

  14. Aaron Peters

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/bHlbsc. yth Comedians

  15. william

    You might also look at Samuel Brittan’s last piece in the FT.A man of sound judgement, he compared the future collapse of the euro to the fight against sterling devaluation 1961-7.The pig in the poke is who holds Irish bank and government debt, the future victims of the haircut,step forward German banks.

  16. Mr. Sensible

    The Irish deficit has gone up, not down.

  17. Nick H.

    RT @leftfootfwd: Why do the right continue to support Ireland's disastrous economic policies? http://bit.ly/bHlbsc – Boneheads.

  18. Raymond Kelly

    I assume Guy Fawkes’ comment about Ireland bouncing back faster than the UK is based on the classic view that recession drives wages down and leaves only the most efficient firms in he market. Low wages plus efficiency then attract investment hence the notion of “bounce”.

    It is a Social Darwinist view of the economy, it will emerge “fitter” based on the firms that “survive”. There can be a problem, of course, that not enough survives to re-employ most of the workforce. The UK couldn’t regenerate its industrial areas for twenty years after the eighties crash.

    It is also the case that no-one will invest while demand is falling since they can’t guarantee a market for their goods and no-one can explain why demand should stop falling if wages keep shrinking.

    In the thirties so many people lost their money in the stock market collapse no one wanted or were able to invest. Negative sentiment was entrenched and the system didn’t “bounce”.

    Currently there is still a lot of private debt and that will inhibit new investment. That makes it risky to take more money out of the economy right now. Ideologues like Guido don’t appreciate the fact that the problem is not as simple as he thinks.

  19. Tyler

    The article above makes no mention of the huge bailouts necessary for Ireland’s banks and the fact that the country is effectively bankrupt…..so it’s borrowing costs have blown out….and that the only buyer for Irish debt is the ECB.

    If they decide not to go for cuts, they’ll never get financing through the bonds markets again, unless the ECB keeps buying them with taxpayer money….which Mrs Merkel seems sure to stop in short order.

    The disastrous economic policy was the 10 years in the Euro with massive credit expansion enabled by negative real rates. THis current monetary policy is the only long term option.

  20. Mike Guillaume

    As I wrote it in a comment on a previous story about Ireland, it seems that the only ways out are either a lower euro -Germany doesn’t want this- or leaving the eurozone.
    You can find interesting (and not otimistic) views about the future of the eurozone on http://www.mikeconomics.net.
    Read also today: http://uk.reuters.com/article/idUKTRE6A759H20101108.

  21. False economy website « 21stcenturymanifesto

    […] Right wing UK commentators who have urged the Coalition to cut have been amongst Ireland’s loudest cheerleaders over the past year. […]

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