Paul Krugman wrote a piece for the New York Times entitled British Fashion Victims describing his thoughts that Britain will revert to a recession due to their Government’s insistance on imposing austerity measures in the midst of a recovery (albeit a very mild and shaky recovery).
As I read the article, I couldn’t help but notice the similarities with what the Irish Government is doing. I don’t believe we have emerged from recession yet, despite what official figures tell us. Unemployment is still high and until this starts to reduce there’s no recovery for the majority of people on this island.
Despite this, we have to bend to the wishes of our European masters, and reduce our deficit to 3% or below by 2014. So far, estimates of how much this will cost have been increasing every time they’re revised, and the latest revision has the cost at around €11 billion. Talk of cuts for our 2011 budget are in the €5 billion range.
Our major issue is we’ve pumped billions into zombie banks, and the EU is pressuring us to sort out our deficit. Had we the flexibility now to borrow and spend some more, it’s a perfect time to look at starting and completing infrastructure projects. We have huge amounts of unemployed construction workers, so the skillset required for the infrastructure projects is sitting idle in this country. Instead of cutting these projects, we should be putting the skills of these people to use.
Now is the time we need our Government to invest in this country. I won’t argue that our civil service doesn’t need reform, or that our social welfare system doesn’t need reform or that Government services in general don’t need reform. I’m simply arguing that now is not the time to be doing this.
Now is when we need our leadership to instill confidence in our Government and our economy. We need courage to stand up to the European Commission to fight for what’s best for Ireland, not what’s best for Europe and the Euro. We can succeed, but only if our Government leaders are willing to put this nation ahead of European politics.