Dublin Opinion

In its statement yesterday the Government conceded that “a tax shortfall of at least €5 billion for 2008 is likely at this stage”. Even allowing that the Government incurs no overruns on the spending side and succeeds in its savings campaign, this would leave the overall Government deficit this year at 3.3 per cent of GDP. Thus, even putting the best possible complexion on the public finance figures for 2008, the Government will be in breach of the 3 per cent limit on budget deficits imposed by the European Union’s stability and growth pact.

An extremely tough budget for 2009 will be required to keep next year’s deficit within shouting distance of the permitted EU limits.

But why exactly must we remain within shouting distance of the permitted EU limits?

Fortunately Michael Taft has anticipated Tansey’s argument:

To argue for borrowing is to argue for a tool, something more than just a ‘tide-us-over’ exercise. From this platform we can then discuss the damage of unleashing the property market, the narrowing of the tax base, the lack of an enterprise strategy to grow and develop the indigenous sector; a borrowing policy is a gateway policy to other areas. And it allows us, temporarily, to escape the ‘increase-tax, cut spending’ trap the Right would set for us.