Budget politics - Painful medicine

Speaking on The Week in Politics yesterday, Finance Minister Michael Noonan stated that the proceeds from the promissory note deal could be used to lessen the pain of the October budget.

Mr Noonan said this decision will be taken in September, but warned that it will still be a tough budget, even if the Government uses all of the €1bn proceeds from the deal.

There are options as to whether or how money from the deal could be used. Adjustments projected for next year, initially set at €3bn, could be reduced to €2bn.

This could mean fewer tax increases or the introduction of fewer cutbacks. Nevertheless the ultimate target of reducing the overall deficit to 3% by the 2015 deadline will still have to be met.

Ultimately it is only a question of when the painful medicine will be administered. The whole thing is a salutary reminder of the real impact of the recent revelations of the bank tapes. These have been reading like a sick joke, for which banker David Drumm apologised yesterday.

Come October the whole thing will seem all the sicker.