The implementation of this Agreement is subject to no currently unforeseen budgetary deterioration.O dear. I think we might have just had an unforeseen budgetary deterioration over the six o clock news this evening. Even Minister Lenihan admits that this has serious implications for taxpayers (contrary to the McCarthyite dictum that NAMA and the fiscal crisis have nothing to do with each other). NAMA has everything to do with the crisis because it is going to magnify the mountain of debt, contraction and cost-cutting imposed by a general slump. With GNP falling at an annual rate of over 12%, tax receipts under-shooting for most months there is every prospect of an early budget or an early election or an early bank collapse or all three. Either we keep on feeding the junkie called Anglo or we allow the junkie to die. Pretty stark. But, the problem right now for Government is whether it can deliver on all of its promises to:
- not cut public sector pay before 2014
- reduce the General Government Deficit to 3% of GDP by 2014
- keep the Anglo junkie fed with €10bn every few months (does anyone believe that another shot will not be demanded - we are in free fall)
- and keep the economy from contracting by another 10-12% this year (the forecast for a decline of 3% but that remains to be seen).
Worryingly, the Labour Party have pointed out (Strategic Investment Bank) that:
At the same time, Ireland’s fiscal position and the restrictions imposed by theWhere does that leave us if people are saying that we are under siege on all sides and to such an extent that we cannot invest our way out of this crisis along with other policy measures?
Stability and Growth Pact (SGP) represent a major constraint. There is little prospect that the level of investment necessary to improve our infrastructure can take place in the next decade given the current state of the public finances. And even without the fiscal crisis, the SGP, which includes public capital investment as part of its limit for the budget deficit, would restrict the State from making the necessary investments.