Austerity: Have we a choice?

NO says Dr Constantin Gurdgiev

HOWEVER one interprets the core parameters of the fiscal discipline to be imposed under the Fiscal Compact, several facts concerning the new treaty and Ireland’s position with respect to it are indisputable.

Firstly, the new treaty will restrict the scope for future exchequer deficits. Combined structural and general deficit targets to be imposed imply a maximum deficit of 2.9%-3% in 2012, as opposed to the IMF-projected general government net borrowing of 8.5% of GDP. Secondly, it will impose a severe long-term debt ceiling, but that condition will not be satisfied by Ireland any time before 2030 or even later.