Commission warning - Unavoidable reality check

THE warning from the European Commission yesterday, that our plans to cut the budget deficit to within EU limits by 2014 need to be more specific is not surprising and will have an impact on all of us.

Basically, we need to identify where the axe will fall next. Though not unexpected, this is not a cheering reminder but it is our reality and we deny it at our peril.

The warning must have an impact on this week’s talks between Government and public sector unions. It serves to remind us of the precariousness of our situation and that we have a considerable distance to go before we can even consider reversing pay cuts.

The EC warned too that our economic forecasts are more wishful than pragmatic. It also stressed the need for further reforms of our pension systems, as the impact of an ageing population on our public finances is higher than in other countries. The challenges have been identified and if we are to overcome them we must prepare and accept a response that will work.