Sir, – The medium-term fortunes of the Government, the economy and the quality of public services hinge on the optimum use of the additional €40 billion to be taken on the by the State.
Such additional debt is required to plug the difference between the 2020 and 2021 State spending and the tax revenues which the economy, now constrained, is capable of generating to fund the running of the country.
Some of the additional borrowing is to finance spending will be once-off in nature and cannot be avoided.
Some of the additional borrowing is to plug the reduced tax revenues being extracted from business, due to the various State decrees, causing multiple job losses. That is probably unavoidable.
Some of the additional borrowing is to be used to boost the State’s cost base and will therefore be recurring. Given that we just managed to balance the books in 2019, after years of deficits, the proposed boost to recurring State costs will inevitably trigger higher taxes in the future. Even then will we be able to balance the books in the medium term?
We cannot increase borrowings forever. The jump to higher recurring State costs puts our prosperity in doubt.
To make matters worse, I suspect the contingency fund included in the budget could, if the Government buckles under pressure, be targeted as the source of finance for further additional recurring costs imposed on the State. It would be a grave misallocation of resources to let that happen, but happen it could.
The centre needs to hold. Exposing the State to ever-increasing running costs is not the way to go for either the left, middle or right. Perhaps the Government needs to look at getting better value for money from its already enormous State spending. While those more equal than others will resist change, even in a national emergency, that needs to be done. – Yours, etc,
JM DODDY,
Dublin 14.