Figures set Coalition sailing into election sunset

With the economy back on track, the prospect of two easier budgets in the 18-month run-in to the next election has increased the chances of the current Coalition seeing out its full term, and even securing a second one, writes Political Editor Mary Regan

Figures set Coalition sailing into election sunset

IF the coalition had a wind at its back going into this Dáil term, then yesterday’s figures on economic growth must make it feel like it’s sailing into the sunset of the next general election.

The prospect of two easier budgets in the 18-month run-in to the next general election has increased the chances of the Coalition staying out its full term, and even securing a second one.

The lunchtime headlines detailing growth rates not seen since the Celtic Tiger and comments from the Finance Minister Michael Noonan that extra taxes or cuts will not be needed to reach the planned deficit targets put a pep in the step of Government TDs.

The numerous first-time TDs have spent three years — or their entire time as an elected representative — taking flak from constituents for austerity measures which they often found difficult to justify.

And Labour TDs, who often wondered if they should have joined some of their colleagues in jumping from what seemed to be a sinking ship, feel their steady nerves might just pay off.

The figures, published by the Central Statistics Office, show the economy expanded by 7.7% in GDP terms in the year to the end of June.

This is the strongest annual growth recorded in the economy since early 2007 — the year before the economy crashed dramatically — and marks an emergence out of the long, hard period of austerity.

Mr Noonan said the numbers should further ease pressure on the Government to find extra taxes or cutbacks in the forthcoming budget.

“The turnaround that we are seeing in the Irish economy is a direct consequence of the policies pursued by this Government and the sacrifices made by the Irish people,” he said.

The figures were “a vindication of the actions we have taken so far”, according to Minister for Public Expenditure Brendan Howlin. “Many people criticised the approach adopted by the Government. They advocated short-term solutions that would have done untold damage to the Irish economy,” he said.

The economic narrative of the past three years — from the promissory note deal to exiting the bailout to reducing the deficit at a quicker rate than expected — could not have played out better for Fine Gael and Labour who can now boast of their achievement in steering the economy through very troubled waters.

But the good news doesn’t necessarily mean it will be all plain sailing and Minister Noonan was keen to point out that he’ll see off any clamour for a giveaway budget.

The balancing act for the Coalition now is to manage the expectations of an austerity-weary public who are likely to become more demanding for their share of this recovery.

All the talk of economic recovery will make the already unpopular water charges all the harder to swallow, particularly for families who feel they are not feeling the benefits of this economic turnaround.

“I don’t think there is a clamour for a giveaway budget,” Mr Noonan cautioned yesterday. “The priority of the Government is to sustain the recovery and turn the recovery into jobs.”

He said: “The people who suffered most over the last number of years are the people who lost their jobs and the people who were forced to emigrate. We want to get people back to work and we want to get all those people who could contribute to the growing economy and are living elsewhere, back to the country.”

The recovery phase also brings different challenges for the opposition.

Sinn Féin will continue to argue that austerity has not worked for everybody and should have been dished out in a fairer way — a message that will continue to have resonance with the electorate.

The delivery of this message will prove harder for Fianna Fáil which initiated some of the unpopular policies of the current coalition — such as water charges.

The party can argue that it set the recovery process in motion with some severely difficult cutbacks introduced by the late Brian Lenihan. But it’s unlikely to want to remind anyone of its history of economic management.

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