Press Release

SIPTU says government economic projections will undermine future growth prospects

Date Released: 14 April 2021

SIPTU economist, Michael Taft, has said that the projections in the Stability Programme Update (SPU) of continued ‘low-tax, low-spend’ policies by the Government will undermine the future growth prospects of the economy. The SPU was published by the Department of Finance today (14th April) and sets out a range of economic policies to be pursued by the Government over the coming years.

Michael Taft said: “While today’s projections are based on a ‘no-change’ policy, the underlying path is to return to pre-pandemic normality, which is unsuitable to the challenges society faces over the next decade.

“On a positive note, the SPU suggests that, without any tax increases or spending cuts, the deficit will disappear by 2025.  This should be the end of any talk about the need for austerity or fiscal contraction.  However, it would be a mistake for the Government to commit to a balanced budget over the coming years.  We need to maintain borrowing over the medium-term to fund a significant increase in economic and social investment.

“In this regard, SIPTU welcomes the Government’s commitment to increasing investment although much more will need to be done given the challenges of climate change, Just Transition, automation and a projected low-growth future.

“Unless there is a substantial increase in revenue, real expenditure on public services will stagnate and shrink as a proportion of our national income. This will put considerable pressure on what is already a relatively low spend on public services by EU standards.

“Even with the fall in unemployment payments as lockdown restrictions are eased, social protection spending is likely to be unsustainably low, according to these projections. The Department’s projections will be unable to meet the expectations of people for greater income security.

“The SPU projections are not about new policy departures. What they do is highlight the need for a substantial increase in employers’ social insurance, tax increases on capital and wealth and a rejection of a balanced budget strategy, in order to finance economic and social investment. This is the only way we will meet the many challenges that lie ahead for society and the economy.”

 


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