AUSTERITY PROGRAMME MUST BE 'SIGNIFICANTLY MODERATED'
22 Sep 2011
The Government should use the forthcoming budget to "significantly moderate" the ongoing austerity programme and move immediately to stimulate domestic demand, Congress Chief Economist Paul Sweeney has told a major conference on Ireland's debt crisis.
Mr Sweeney said Government should not proceed with the planned €3.6 billion of cuts and tax rises in the forthcoming budget.
He was speaking at a conference on Ireland's debt crisis, organised by the Feasta economics foundation, which is taking place in Dublin from September 22-23.
"We need a better way to tackle this crisis. We should stretch out the 'period of adjustment' to 2017 and significantly moderate the budgetary adjustment planned for this year.
"We also need to raise more in tax from high income earners - as is happening in the United States, France and Spain.
"In order to stimulate domestic demand we should invest €2 billion per annum over the next three years from the National Pension Reserve Fund and put that money to work creating jobs.
"It can be invested in 'high multiplier' projects that will deliver quick returns in terms of jobs and growth. These include: the retrofitting of homes, a programme of school building and upgrades, investment in public transport, national skills upgrade, a national water system and broadband."
Mr Sweeney said that if Government proceeded with the planned adjustment "there will be no economic growth whatsoever next year. That would be disastrous for jobs and for working families. We need to significantly moderate that plan.
"We have already taken some €20.6 billion from the economy and the result is a shocking 24% collapse in domestic demand, over three years.
"We now have a major unemployment crisis and it is clear to anyone who studies the data that these policies are unsustainable.
Mr Sweeney said that while exports were performing well, that alone would not be sufficient to generate a recovery.
ends