Austerity and Ireland’s sacrifice of growth (and tax revenue)…

Stephen Spillane sums up the dilemma of all political parties in the Republic, when he notes the latest word from the IMF…

We have no choice but to cut. The deficit is too high. Its that or leave Anglo fall. Maybe that would mean the cuts would not have to be so deep and therefore we would have a fighting chance of recovery. I some how doubt our government will take that chance.

And despite the hyperbole from both opposition parties, it is not clear they will cut and run from Anglo either. There is a lot of legacy money from the government buried in that project. It’s also worth noting that the Fianna Fail/Greens government were just following orders, erm, from the ECB, and mainstream financial opinion.

Stephen links The Telegraph which flags up a lesson from Ireland for George Osborne, who for all his brilliance may have one major weak flank – the deflationary medicine he proposes for the UK has nearly killed Ireland’s economy:

We are seeing a pattern – first in Ireland, now in Greece and Portugal – where cuts are failing to close the deficit as fast as hoped. Austerity itself is eroding tax revenues. Countries are chasing their own tail.

In Britain’s case we await the facts of the CSR before rushing to the assumption he’s not already taken this into account. As far as Ireland is concerned, the epic fail is not just the failure to right the ship but the failure to act early enough.