While most people will breath a sigh of relief that Budget 2015 gave back more than it took away, one man who may be more disappointed than most is Prof John McHale of the Irish Fiscal Advisory Council.
Mr McHale, chair of the independent fiscal advisory body established by the Government in 2011, recommended that a €2bn budgetary adjustment be made this year to protect the country’s fragile economy.
Amid what he referred to as a frenzy of demands and political pressures in recent weeks, the NUI Galway economics professor said his concerns over the impact of a less stringent budget had grown as of late.
“Our advice hasn’t changed, we think the Government should make the final push that they had planned, which was for a €2bn adjustment and, if anything, our concerns have heightened in the last few weeks,” he said on RTÉ Radio yesterday.
“It really has been a frenzy of interest group demands and political pressures. The hope was that we’d be inoculated from repeating the mistakes of the past but it really is remarkable how quickly memories simply faded.”
While accepting that the €2bn adjustment may not be needed to meet the target of reducing the fiscal deficit to under 3% by the end of 2015, as agreed with the troika, Mr McHale warned that the economic growth seen this year is not certain to continue into 2015 — creating the possibility that the target could be missed.
“We’ve had strong growth figures this year, a lot of that has been due to very strong performance on the export side but there is some unusual patterns in those expert numbers and we can’t be assured that growth will actually come to fruition, so by targeting something like 2.8% that does create risks that the 3% target would still be missed,” said Mr McHale.
He expressed particular concern over the country’s outstanding debt of €179.9bn which he feels poses a significant risk.
Mr McHale also defended the advisory council’s role despite the Government, which set it up to advise on budgetary matters, ignoring its recommendations.
He denied there are now grounds for considering his position, claiming more generous measures could have been included in the budget were it not for the council.
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