Ireland’s economic winter of discontent has given way to the green shoots of spring. While the factor 50 isn’t yet flowing in all regions of the country, and the post-2008 bust still casts a long shadow on certain cohorts of the population, there is a sense that summer is coming.
On 28 May, the government launched its spring statement. Making a virtue of the necessity for all EU members to provide Brussels with an annual update on their public finances and economic projections, the usually-dry ‘Stability Programme Update’ was dressed up in political clothing this year to herald the supposed good times ahead.
Politically, the aim is not only to give voters a heads-up on the tax cuts and spending increases that lie in store. It is also designed, on the one hand, to project the sense that the government has a solid plan for the future and, on the other, to hamstring opposition parties by increasing the risks to their credibility if they step outside the broad fiscal framework set out. It also aims to put a ceiling on the demands of public sector trade unions as part of the forthcoming ‘national economic dialogue’ by establishing boundaries.
Economically, there was little ground-breaking in the spring statement: reasonably optimistic – but not outlandish – economic growth estimates out to 2020 and a stocktaking exercise on the state of the public finances, the labour market and the state-owned banks. There was also a technical – yet important – explanation of the results of recent negotiations on the application of EU rules on Ireland’s public finances. Essentially, this boils down to an extra billion or so for the government to play with in October’s budget if they are to comply with the rules. The government has signaled that the total budget package is therefore likely to amount to €600m of spending increases and €600m of tax cuts. No giveaway, but not to be sniffed at with an election on the horizon.