'Stabilising finances' key to economic recovery

FISCAL POLICY:STABILISING PUBLIC finances and the banking system and restoring Ireland's international competitiveness are the first steps towards a "smart economic policy", according to the chairman of the so-called An Bord Snip Nua, the body charged with reducing the State's huge budget deficit.

UCD Prof Colm McCarthy, who confirmed that the emergency budget would be on April 2nd, hinted that the group would recommend cuts in the National Development Plan and capital infrastructure projects.

He said there were three groups of projects within the exchequer capital programme: those that should go ahead “assuming they are financible”, those that should be dropped on the grounds of poor economic value and projects that have been overtaken by the slowdown, and should be deferred, but not necessarily cancelled.

During a debate on the recession, Prof McCarthy said “we have to stabilise public finances, we have to stabilise the banking system”.

He told delegates the last time Ireland was in such a “super downturn” was between 1940 and 1945. Tax revenues are down 28 per cent on what they were two years ago and exchequer spending this year was likely to be 49 per cent of gross national product, compared to 55 per cent in the mid-1980s.

Prof Peadar Kirby of the University of Limerick said that “politics and not economics is the key to creating a better Ireland”. He said now was the best opportunity since 1918 to reposition Irish politics. “Let’s show Fianna Fáil the reality of political mortality,” he said. The polls showed Labour, Sinn Féin and the Greens 5 per cent ahead of either of the other two options, and that offered for the first time “the opportunity to remake Irish politics”.