Break euro link and save economy

Our deficit is 15bn per year, every cent of which must be borrowed.

The Government is seeking to save €300m per year for the next three years in Croke Park 2. And a minister recently declared that this will put us back on the ‘straight and narrow’, and that they will not be looking for any more from the public sector for the foreseeable future.

But the €300m represents only 2% of the annual deficit; the Government still has a deficit of €14.7 billion per year. Where is the other 98% of the deficit going to come from, or is it a case of ‘They fear to speak of 98’? And what about the €200bn or so that we have already clocked up, and increasing by over €1bn a month?

A few simple calculations reveal some stark figures. We are borrowing €41m a day or €1.7m an hour. In the length of time it takes to read this letter (say three minutes) we will have increased our indebtedness by €85,000. I spend an average of two hours on Sunday morning reading the newspapers. During that time the country’s overdraft goes up nearly €3.5m.

And the €300m which the Government say will be saved by Croke Park 2 will run this long-suffering country for just over a week! Imagine it: crucify our police force, our nurses, our firemen, our teachers and other public service workers for such a paltry return. Let Eamon Gilmore ponder over that one while he is sipping a glass of wine from a €70 bottle from the cellar in the Department of Foreign Affairs.

Let us now compare the finances of our indebted country with those of a family embroiled in debt.

We suppose that the family has a deficit of €500 a month, and that they have this shortfall for the last five years. The family decides to put draconian reductions into place — saving 2%, if they do what the Government has done for the next three years. This amounts to €10 per month. They then claim, as has the Government, that this will put them back on the straight and narrow. But they still have a deficit of €490 per month. And they have clocked up a debt of €30,000 during the last five years. Does this make any sense?

It would seem to me that further reduction in Government expenditure by digging deeply into social welfare payments is a lost cause. Such reductions will have a dire effect on many of the unfortunate people concerned, not to mention on an economy already constricted by cuts, and will further cripple the retail and services sectors, making a bad situation worse.

So that leaves only one possibility, which is to raise additional taxes to the tune of around €15bn a year, or thirty times the putative take on the property tax in a full year. Does any genius in the Government seriously entertain such fantasy given that our export markets — our only glimmer of hope — are now threatened by falling sterling, and turmoil in Italy is now putting the entire eurozone at the edge of another abyss?

Is the time not now ripe to break with the euro, devalue our currency to generate exports and default on the debts?

Look at Iceland which is now functioning very well. As one observer put it: ‘the reason that Iceland is now largely out of trouble is that the Icelanders are men’. Enough said!

Tom Barrett

Foxrock

Dublin 18

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