The Government’s ability to implement reforms has not diminished because of the departure of the troika, but Irish people are suffering from “austerity fatigue”, a leading Irish official has said in London.
Robert Watt, secretary general of the Department of Public Expenditure and Reform, speaking during a seminar held by the Institute for Government, said: "I think it is important to say we were reforming and making cuts before the troika arrived.
"They didn't arrive until 2010. We had started cutting from 2008. If there is a slowdown in reform, [it is because] over time it becomes more difficult. There is such a thing as austerity fatigue fatigue," he said.
Reform slowed
There have been complaints that the pace of reform has slowed dramatically in
Government departments since Ireland exited its bailout.
However, Mr Watt said austerity had “worked so well” in Ireland that bond yields were now down to 2.6 per cent for 10-year debt, “the economy is recovering, confidence has returned”.
However, such improvements make “it more difficult for the Government to continue to do what needs to be done” because “people don’t like austerity and they have had enough. It is very, very difficult to keep the momentum going.”
Ultimately, he said, it is for politicians to “convince people of the need to continue to do things that may be unpalatable either because you can improve some services, or you don’t want to repeat the mistakes of the past”.
Responding to a question about the influence of the bond markets, he said: "If you don't like the bond market, well then don't borrow. Do your finances in a different way, don't rely on it."
End of austerity
Next year, Ireland will be “close to the end of austerity”, he said, pointing out that the deficit will be down to 4.7 per cent this year while Ireland already has a primary balance, excluding interest rates on the debt which is “very important for debt dynamics”.
However, significant demographic pressures exist, with growing numbers of over-65s and children: “We are looking at more commissioning and moving away from block grants, and encourage lot of different actors to bid to provide public services,” Mr Watt said.
