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Irish May Halt Budget Reform Early--Govt Party

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http://www.guardian.co.uk/business/feedarticle/9178449

Ireland may not have the political will to bring its budget deficit in line with EU rules as planned by 2014, the chairman of the smaller governing coalition member Green Party was quoted as saying on Sunday.

Investors and European leaders have praised Ireland for austerity measures culminating in 4 billion euros ($5.2 billion) of spending cuts imposed in last December's budget for 2010.

Green Party Chairman Dan Boyle told the Sunday Tribune it was "probably a heresy" for a government party to question whether the deficit could be cut to 3 percent of gross domestic product by 2014 from more than 14 percent in 2009.

"It is certainly doable if you want to be draconian every year," Boyle was quoted by the newspaper as saying. "But is it politically feasible and is it socially possible?"

Boyle said he still expected the cabinet to deliver the 3 billion euros of savings planned for the 2011 budget in December and then the government could "take stock".

"I do not see the public appetite continuing," Boyle said. "It could be that we have neutral budgets for a period."

The Green Party last year debated quitting the alliance with Prime Minister Brian Cowen's Fianna Fail party due to the strains of the fiscal tightening and bank rescue programme, but its members ultimately decided to stay on board.

Cowen and Finance Minister Brian Lenihan, the main architect of the reforms and also from Fianna Fail, are adamant Dublin must stick to austerity measures for the next four years.

If Ireland loosened its budget discipline, it could cause a flight of investors who already demand a hefty premium for holding Irish sovereign bonds.

Perhaps someone should point out that what you think is not feasibly socially or politically may be forced on you by the bond markets?

Also perhaps the Irish are getting a bit miffed that they are cutting whilst the Greeks get a bailout (possibly) and there's talk of a Spanish bailout whilst they get nothing.

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Part of the success or failure is how austerity is done. Say you had to reduce spending by 25%.. and you gave a true across the board 25% pay cut to everyone - pensioners and contractors included. It wouldn't be that bad.

Otoh if you just fired 40% of the staff and gave generous bonuses to management for hitting targets that is going to have major social problems because of unemployment.

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Part of the success or failure is how austerity is done. Say you had to reduce spending by 25%.. and you gave a true across the board 25% pay cut to everyone - pensioners and contractors included. It wouldn't be that bad.

However the highly visible banking bailouts have already transferred resources to the best-off (and I'm not talking upper-middle class mortgagors or even Brits here, I'm talking about bank bondholders who were saved by the transfer of their failing private loans to the taxpayer's books). The kind of people who you's expect to

have praised Ireland for austerity measures culminating in 4 billion euros ($5.2 billion) of spending cuts imposed in last December's budget for 2010.

That is going to stick in people's craws eventually, both here and in Ireland.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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