The Bigger Picture

18th August, 2009

The debate about the McCarthy report is beginning to heat up again…

I had a few sobering discussions about the state of our economy over the weekend that have made my realise (again) that this report is not the end of the debate about our public finances. It is merely the start. What does that mean?

The total price tag of all of the McCarthy options comes to around €5.5 billion. We will probably borrow €25 billion this year. So the total savings of McCarthy in any given year probably represent around one quarter of the total amount that we will borrow this year. Nobody is stating that we need to get the borrowing down to zero (that would be madness) however we need to get it under control. That will happen in two ways. Through either tax receipts going up or public spending going down. The question then is by how much these things need to change.

The Government are stating that €4 billion will be needed in 2010 and 2011 (that’s €4,000,000,000 each year!!!!). Then €3.5 billion for the 2 years after that.

So, McCarthy (or a version of it) will need to happen on at least twice again. This is why I continue to believe that the economic sovereignty of our country is in grave peril. If we cannot make the decisions then some one else will be asked to step in for us.

It behoves all of us to remember this in the coming months of debate.