Titanic sinking slower than expected – and the Brians still play on

LIKE a desperately cheery first mate of The Titanic, Brian Lenihan announced the ship was sinking – but slightly slower than expected.

Yes, he’d forgotten to plan for enough lifeboats, but this was an emergency situation and everyone had to forget about just why we hit the iceberg so hard while he and Captain Cowen were at the helm and start trusting their judgment now.

As the Finance Minister unveiled the pre-budget estimates, he appeared to be surprised at why unemployment was remaining so “stubbornly” high.

Opposition parties were quick to point out it might have something to do with the fact this country, unlike virtually all our partners, has virtually no job creation stimulus in place.

Mr Lenihan expects the nation to take comfort from the fact unemployment is projected to peak at 481,000, 13.75%, next year, rather than the previously estimated 541,000, 15.5%.

With figures that high, it would be difficult to feel relief at the Live Register “only” nudging half a million, but it is impossible to do so when one considers the main reason for the lowered projection is that tens of thousands of young people are once again fleeing the country in anger and despair to find work and a feeling of self-worth abroad.

Mr Lenihan is an eternal optimist, and while this country may be experiencing the deepest slump since the great depression, he was keen to point out that every dark cloud has a silver lining and prices have not dropped so fast since 1931.

The minister insisted on using this as cover for the major cuts in children’s allowance, welfare payments and public sector pay he is to announce in the December 9 budget.

Though he hinted he would take the EU’s offer to extend our five-year financial crisis period to a six-year one, that will not ease the situation until 2013 at the earliest, and €4bn worth of cuts are needed now to keep the deficit to this year’s level of 12% of national wealth throughout 2010.

With the state payroll accounting for 35% of Government spending and the social welfare budget accounting for 36%, it is difficult to see how either could escape, with such massive readjustment in the offing.

The opposition claims it is all a matter of priorities and they could wield the knife without amputating €223m via the welfare Christmas bonus, or slashing another €280m from children’s allowance.

By making such claims, Labour and Fine Gael will now be forced to come up with realistic alternative savings or be condemned as big hearted, empty-headed fantasists unfit for the tough choices of Government.

Mr Lenihan also wants us to take cheer from the fact the economy will decline by 1.5% next year, rather than the 7.5% in 2009, but the Finance Department admits any growth in 2011 will be sluggish at best and lag well behind our European partners.

With taxation exploited to the full in the past two crisis budgets, there really is no further scope there – though the Greens’ carbon levy will bring in around €450m when finally unveiled next month – especially as the marginal rate of tax is now 52% for PAYE workers and 55% for the self-employed.

When the €750m being saved by cutting back capital projects is added to the carbon tax income, it still leaves another €2.8bn to be slashed off public sector pay, not to mention health, education and welfare budgets, so whatever spin the Finance Minister tries to put on these estimates, it’s going to be a long and bitter winter for the victims of the slump.

Mr Lenihan may be clinging to the wreckage, but it is clear from these predictions, the Irish economy is dead in the water – at least for the next two years anyway.