Spring statement not likely to be a thriller

The Government unveils the spring economic statement on Tuesday week, a document in which Michael Noonan and Brendan Howlin will declare joint fiscal vows for the election. Considerable expectation surrounds this endeavour yet the end result may turn out to be more prosaic than anything.

The statement will certainly serve the Coalition’s political agenda of ensuring public debate centres on the economy, i.e. right where it wants it. But this will be no budget. There is little expectation that the statement would cast detailed light on actual tax concessions or other recovery dividends. This will be a broad brush exercise, concentrating on the degree of fiscal space available in coming years without specifically saying what would be done within it or when.

It was not always this way. Indeed, the very notion of the statement was conceived at a time when the Government was besieged over the water fiasco. After delivering the first expansionary budget for years, the Coalition saw the benefit disappear before its very eyes as one mis-step followed another. The turmoil was settled in the end, but not before a huge U-turn on the water regime.

Around then, however, there was no end of disquiet within Government at its failure to capitalise on the nascent economic turnaround and the seepage in public support. Indeed, the background chatter suggested emergency action would be required if there was no improvement in the Government’s fortunes by this time of the year. Such action might just have included something akin to a mini-budget in the spring statement. It is easy enough to see that any threat of an early election would have made such a move all the more likely.

The political situation has since changed appreciably. So the Government perceives little political need for an early deployment of heavy fiscal weaponry. The armament will be held in reserve for the October budget. Thus the spring statement might be something less than a thriller.