GOVERNMENT PLANS to cut the budget deficit to 3 per cent of gross domestic product by 2014 will result in tens of thousands of job losses and a decade of decline, a conference on the Irish economy was told yesterday.
Speaking at the opening of the Towards Recovery conference in Dublin, Paul Sweeney, economic adviser to the Irish Congress of Trade Unions, also described Minister for Finance Brian Lenihan as “worse than Charlie McCreevy as an economic war criminal”.
The two-day conference was organised by the Foundation for European Progressive Studies and independent think tank Tasc.
Mr Sweeney said the target of reducing Ireland’s budget deficit to 3 per cent of GDP in four years was too brutal. It would drive out any economic demand and wipe out businesses. “Tens of thousands will lose their jobs and the country will not recover; there will be no growth for recovery,” he said.
Front-loading the cuts would be “akin to saturation bombing” and would result in a wasteland. It would deflate the economy, he said, causing the debt spiral to worsen and the country would go into a decade of decline. He suggested six years as a more realistic timeframe to reduce the budget deficit.
Mr Sweeney said that while he should be more moderate in his language around Mr Lenihan’s handling of the economy, he believed the Minister had made serious mistakes. He had been conned by the bankers when he gave the blanket bank guarantee.
He urged the Government to give up the four-year plan and negotiate with bond holders around debts owed by Anglo Irish Bank.
Dr Lawrence Mishel, president of the Economic Policy Institute, a Washington-based think tank, offered a lesson for politicians that might follow the current Irish Government into office.
He said US president Barack Obama’s regime had “let Bush off the hook” by not blaming him for the crisis and by talking about “green shoots” in the economy almost immediately after it had taken office and launched its stimulus package. “As a result people blamed them; that’s pretty stupid. That’s not only ideologically incompetent, it’s politically incompetent,” he said.
MEP Proinsias De Rossa said Ireland needed to get to grips with the European Commission’s “ideologically driven austerity”.
Economist and author Michael O’Sullivan said the “one size fits all” fiscal policy of the EU was wrong. The conference continues today.
