David Begg tells McGill school that Government austerity programme is not working
26 Jul 2011
The general secretary of the Irish Congress of Trade Unions, David Begg, has warned that taking €4 billion out of the economy in the December budget will compound the deflationary impact of the austerity measures of the last three years.
Speaking at the McGill summer school in Glenties, county Donegal today (Tuesday 26th July), David Begg said that "austerity is not working" and that further public spending cuts on the scale envisaged by the Government were self-defeating.
"This will compound the deflationary impact of the €20.6 billion that has been cut in three budgets since 2008. It is difficult to see how this will not seriously debilitate public services because this is cutting into muscle. To compound the problem, demographic change means that the demand on public services will expand rather than contract over the next few years.
"The price of austerity is a lost generation. It would be hard to say that it is a price worth paying in any circumstances but, as it happens, austerity is not working. In the second quarter of this year GNP was down 4.3 per cent on the previous quarter. There is no growth in the economy and without growth to do some of the heavy lifting of adjustment it is not possible to generate the level of primary surplus necessary to allow for debt repayment," Mr Begg said.
The Congress general secretary said that while the outcome of the EU summit meeting last week was beneficial for Ireland it remained an incomplete solution to the debt crisis. He said that the proposals which emerged from the European Council were provoked by a looming crisis for Italy rather than anything to do with Ireland.
"So let's not fool ourselves that the decision of the European Council last week was about us. It was about Italy and the possibility that it might be next. With €1.9 trillion of sovereign debt - three times as much as Ireland, Greece, and Portugal combined - it is of a different order of magnitude," he said.
Mr Begg argued that a common Euro Bond should be introduced in order to Europeanise the debt problem and that deeper fiscal and economic coordination across the euro zone was necessary for the single currency to survive.
The full text of the address to the MacGill Summer School can be found here.