The political pulse: Brexit pessimism and post-austerity choices

The MacGill Summer School, held annually in Glenties, Co Donegal, and which has been taking place all this week, is easy to parody. Official Ireland talking to itself, then having a few pints. Retired civil servants on generous pensions lecturing the Government on fiscal prudence. Interest groups given another platform. The establishment on tour.

In fact, as anyone who has attended (declaration: I attend every year) knows, while the parody isn't entirely without a grain of truth, there's a lot more to MacGill than that. Just as the hardier participants meet each morning to start the day with a bracing plunge into the Atlantic off Portnoo pier, the 10 hours of debates each day are a pretty intense immersion in policy and political issues, mostly led by people who have more than a decent working knowledge of what they are talking about. It's really more than just insiders windbagging with insiders; it's the leading forum for discussion on what our country should be doing, how, where and when, conducted by people who are either involved in these decisions or who have been in the recent past.

As ever, this week’s topics covered a wide range of policy areas. But two subjects dominated discussions on and off-stage: Brexit and the economic choices Ireland faces in the post-austerity era.

Pessimism On Brexit, the sense conveyed by most of the speakers was highly pessimistic. Twelve months ago at MacGill, a few weeks after the British referendum, people were trying to figure out what the vote to leave the EU would mean. This year

most of the speakers and many of the audience contributors believed that a hard Brexit, with the inevitable reintroduction of a harder Border in Ireland – an especially worrying development in places such as Donegal – was now on the way.

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The people who were saying this included Brendan Halligan of the Institute of European Affairs, Pat Cox, former diplomat Seán Donlon, Prof Brigid Laffan of the European University Institute in Florence and the former Irish ambassador in London, Dáithí Ó Ceallaigh. Even if you believe that these people are part of a self-interested pro-EU elite, you have to admit that it would be hard to assemble a group of people who know more about the EU's inner workings, culture, priorities and realpolitik. In other words, they know what they're talking about. Many other people said similar things of the margins of the MacGill debates.

A related concern that many of the MacGill speakers expressed – several of them in colourful terms – was the collapse in the political authority of the British government. Many people expressed horror at the way in which Theresa May’s administration seems to be bumbling towards the cliff edge of a hard Brexit.

If you could summarise what many of the MacGill contributors were saying on the subject, it would go something like this: there will probably be a hard Brexit; there will probably be a harder Border on the island again; the British government doesn’t really care that much about it.

Economic choices The second great theme – the economic choices – saw some of the country’s foremost economists

such as Séamus Coffey (chairman of the Fiscal Council, the State's independent budget watchdog), Feargal O'Brien of Ibec, Peter Clinch of the National Competitiveness Council, John FitzGerald and Stephen Kinsella plot out the choices the Government faces.

Sheila Nunan of Ictu gave the trade union perspective, advocating tax increases to fund greater investment in public services. It's a respectable argument but it's also fair to point out that Ictu members have been the chief beneficiaries of increases in public spending in the past, as much of it has been channelled into current rather than capital spending.

Robert Watt, the top civil servant in the Department of Public Expenditure, warned everyone that the State could not do everything asked of it.

Coffey’s presentation on Tuesday night was probably the sharpest. He was upbeat about Ireland’s economic prospects but stark in his warnings. We are not repeating the mistakes of the past, he said. But we are at the point in the economic cycle where they were made in the past. So do we learn from our mistakes? Do we plan carefully, conduct our budgetary affairs with discipline and with an eye on the long term – or do we splash the cash on pay increases, unwise and politically driven capital projects and tax cuts? Many other speakers questioned the wisdom of the water refunds. Peter Clinch observed ruefully yesterday: “We seem to have learned nothing from the crisis.” Others throughout the week concurred.

Many of these choices will fall to the desk of the new Minister for Finance, Paschal Donohoe, in the coming weeks. Donohoe, as both Minister for Finance and Minister for Public Expenditure, is in a more powerful position than any minister since Charlie McCreevy presided over an unprecedented boom. But with great power comes great responsibility.

Johnny Cash

Donohoe attended in Donegal on Tuesday evening, and was his usual ebullient self, peppering his speech with quotes from U2 and Johnny Cash. He was also his usual cautious self, giving little away about his budget preferences and intentions. But as he said in another context this week, we can’t have our cake and eat it.

Of course, Donohoe’s job is not just to keep the economists happy. He is a politician who lives and dies by the public’s approval. It’s not just politicians who need to be sensible; it’s everyone else too.

But Donohoe also has a duty of leadership. To have a giveaway budget in these circumstances may not quite be foolhardy. But it is certainly highly optimistic.