Sutherland: €3bn cuts not enough
It is clear that well in excess of €3 billion in cuts in next year’s budget will be needed to win back the support of the markets, Mr Sutherland said.
Claims have been made that any attempt to increase the cuts beyond €3bn to calm the markets would meet strong resistance.
“We are told that this is all that the political system can bear but if all the mainstream political parties accept that more is required and are prepared to say it, we can find a way,” Mr Sutherland said.
“The governor of the Central Bank has said we should do so. These cuts involve pain. But the alternative is much greater pain through the higher cost of borrowing, if we fail to act decisively.”
Mr Sutherland, who is chairman of Goldman Sachs International, stressed the need for greater competitiveness, if the economy is to recover.
“Competitiveness is all about productivity. Our costs are still far too high.
“We have really failed to benchmark our costs – particularly but by no means exclusively, wages and salaries – to other European countries,” he said.
“The credibility we won internationally last year was down to the ‘brave budget’ introduced for this year,” he said.
“We now have to step up to the plate again to recreate confidence, we will be given no benefit of the doubt, and reliance on growth is not going to work,” he said.
While the NTMA successfully raised €1.5bn of government debt this week, Sutherland said Ireland’s position in the debt markets has greatly deteriorated due to the dire state of our public finances and an increasingly negative view of us by the markets.
Meanwhile, it was confirmed yesterday that NTMA boss John Corrigan has an agreed salary of €490,000 for this year.
Such details have previously been kept confidential, but Mr Corrigan could also benefit from a bonus of up to 80% of his salary subject to independent assessment of his performance.
Meanwhile, Mr Corrigan told journalists at a conference in Dublin yesterday the much-publicised concerns about the imminent funding challenges facing Irish banks were overdone.
The NTMA chief said the authorities stand ready to make up any shortfalls, if that becomes necessary.
“Institutional support is there, if necessary, to meet the pressures that may arise,” said Mr Corrigan.
