Any strategy that risks decreasing national output in a context where national debt is set to rise above 111 percent of GDP is a risk not worth pursuing. The cost to the economy, employment and the future of the country is too high. The Fine Gael/Labour government must have the courage to challenge the ECB and change policy direction; by agreements if possible, unilaterally if neccessary.
All policy decisions, fiscal and otherwise, must be evaluated on the basis of whether they increase or decrease output from the domestic economy. Anything that decreases output should be avoided, anything that increases it should be pursued. As it stands, the economy would have to grow by 9 percent per annum for at least ten years to pay off the national debt (incurred by collapse in taxes and bailout of failed banks). It would probably have to grow by more to stimulate a level of job creation to match the present number of employees in the labour force.
The government must focus on the ‘GNP side of the debt-GNP equation’. A narrow focus on the underlying budget deficit will not work. This is not to deny it needs to be tackled but it is small fish in a medium term framework aimed at increasing national output. Call it an investment strategy or something else but it is the only thing that will save a generation of Irish youth from a decade of emigration.