EU-Digest: Ireland : The government’s pre-budget report shows deficit of 14.5 per cent of GDP unless spending is cut

"Ireland's golden coin disappeared on public spending"

EU-Digest

The Irish government’s pre-budget report, to be published this week, will show that the general government balance - the measure used by the European Commission for evaluating a country’s finances - will balloon to a deficit of 14.5 per cent of GDP, or €24 billion, next year unless spending is cut. This would be by far the highest deficit in the eurozone, and far beyond the limits agreed between the EC and the Irish government. The simple fact is that the cost of providing public services in Ireland is too high and the case for pay cuts is now not only compelling but urgent. Public sector workers must accept that significant reductions in basic pay rates are required if the quality and variety of services is to remain in order to reduce costs. Secondly, and for basically similar reasons, social welfare payments would need to be reduced. This in line with wages, even though again in real terms there would in fact be no decline. Happy days could be back for Ireland in the future, but only if they put their economy on a more realistic footing.