Reality bites as McCreevy faces facts

THE pall of gloom hanging over the economy has been deepened

Coming hard on the heels of a bleak ESRI forecast, the economic situation looks increasingly depressing as Finance Minister Charlie McCreevy admits for the first time he will have to borrow heavily.

The normally ebullient minister has been forced to eat his words and admit a budget deficit is looming. Mr McCreevy now faces the unpalatable prospect of having to borrow to fund a projected deficit of €750 million amid an unexplained tax shortfall of €1.3 billion. This figure dramatically surpasses previous forecasts and will deepen the growing mood of depression surrounding the economy.

Clearly, with spending continuing to outstrip predictions, the Government cannot afford to sustain the present levels of public expenditure. Mr McCreevy’s options include raising taxes, cutting public spending, or pulling yet another rabbit out of the hat.

Ironically, a minister who fancies himself as something of an economic wizard is finally bowing to the inevitable and tasting the bitter reality of having to manage an economy in difficulty.

Facing tough decisions, he is more likely to be dubbed Scrooge than Santa Claus this Christmas. Despite claims that the economy is still on track, the era of silk Charvet shirts is gone and the hair-shirt is in.

Meanwhile, amid rumblings of discontent within Fianna Fáil, the unthinkable has happened as Taoiseach Bertie Ahern’s leadership is questioned. Whether a

reported meeting of disgruntled TDs was merely a moaning session or a genuine bid to start a heave against him, the damage has been done. Death by a thousand cuts may now be facing Mr Ahern.

In reality, he has only himself to blame. His kid glove handling of the squalid Burke affair raised serious doubts about his motivation and judgment.

His hesitancy in condemning Ray Burke’s history of bribery and corruption exposed by the Flood report prompted rumours the ex-minister might have something on the Taoiseach.

At the time Mr Ahern knew Mr Burke had received £30,000. By any yardstick, his decision to bring him into Cabinet was patently wrong.

It remains to be seen what weight can now be attached to the Taoiseach’s latest denial, in response to queries from Tánaiste Mary Harney, that a serving minister in the current Cabinet also received £80,000.

Public unease has further been compounded by the Taoiseach’s failure to sack the party’s Nice campaign director, PJ Mara, who was criticised by Justice Flood. Hopefully, the garda examination of the report will produce results.

Perceptions of a government in disarray were heightened by leaks of looming financial cuts and by ill-advised ministerial solo runs. As if unaware Nice was in the balance, one minister hoisted a kite about college fees, another raised doubts about the special saving scheme involving more than a million people, and a tax threat was posed over children’s allowance.

It is time the Taoiseach asserted himself. Political cuteness is no substitute for leadership. He has yet to prove he has the mettle required when the going gets tough. Politically, it will be a body blow for Mr Ahern if the Nice referendum is rejected.

Against this backdrop, pro-Nice campaigners are holding their collective breath, hoping voters will distinguish between domestic problems, like the country’s mounting financial difficulties or the Flood revelations, and the larger questions concerning Europe’s future.