The Great Debate UK

Ireland’s euro pain


REUTERS– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

LONDON, April 9 (Reuters) – Ireland’s budget is painful, but insufficient.
Brian Lenihan, the finance minister, is taking an additional 3.25 billion euros out of the economy each year, largely in higher taxes. But that will simply trim the budget deficit to 10.75 percent of national income. The 3 percent eurozone target is a distant dream.

Ireland’s position looks uncomfortably like Latvia’s, only delayed by a few months. It is on the second round of public spending cuts since the International Monetary Fund rescued it last autumn.

Like Latvia, Ireland enjoyed galloping growth. In the decade to 2006, an economic strategy that focused on attracting foreign direct investment, with a super-low corporate tax rate of 12.5 percent, helped generate an additional 1 million jobs, net immigration and higher incomes.