Spending cuts - Recession, depression

Earlier this year the Government announced that €4 billion in savings would have to be found in next month’s budget by spending cuts of €2.25bn and extra taxation to raise an addition €1.75bn.

Since then, however, the Government has indicated the bulk of the saving would have to come from spending cuts.

Taoiseach Brian Cowen indicated yesterday that the Government would be targeting €1.3bn in savings from public pay and pensions just as a start in a slimming down process in the public sector.

This has to be done, he warned, because of the dire state of the public finances.

With a national strike already pencilled in for November 24, he did not rule out a winter of discontent, but he hopes a way forward could be agreed.

There will have to be real leadership on the part of the Government if it is to have any credibility.

“The present service as it’s being provided is not sustainable long-term,” Mr Cowen warned. This has been obvious for over a year.

Even though the Defence Forces have been reduced from 12,000 to 10,000, the Taoiseach contends that productivity has not been much higher. Thus numbers are not necessarily a gauge of efficiency, but he contends the cuts are not being made fast enough.

David Begg, secretary general of the Irish Congress of Trade Unions, warns that there is a serious danger of turning the recession into a depression. Both sides obviously need to realise what much of the country has long recognised – we are already in a depression.