Quarterly Economic Observer - Spring 2012
"We believe that the economic crisis provides us with a unique opportunity to invest in Ireland's strategic infrastructure. There is huge spare capacity in the economy, with a large pool of skilled and un-skilled unemployed workers."
(Fine Gael, NewEra, 2009: 3)
"We believe it is economic nonsense, when unemployment is so high and private investment has collapsed, to cut back on productive public investment. We cannot keep chasing the economy down by simply focusing on raised taxes/decreased Government spending."
(Fine Gael, NewEra, 2009: 4)
Economic recession has impacted severely on the economies of both parts of the island. Fiscal austerity pursued in Dublin and Westminster and reinforced by a coordinated contractionary policy across the European Union is leading to continuing stagnation in the domestic economies in both parts of Ireland. The recession takes its toll on people - especially those facing further cuts in living standards and loss of jobs. The latest IMF forecasts for unemployment indicate a rate in excess of 10% of the workforce in the Republic until at least 2017 (IMF, 2012).
Various agencies and commentators including the National Competitiveness Council, the OECD and the European Commission have identified telecommunications, energy and water infrastructure as key weaknesses for the economy of the Republic and sources of high costs for businesses. To this may be added the provision of a public, universal service of early childhood education, lifelong learning and health.
Previously established targets for a reduction in energy consumption based on imported fossil fuels must be adhered to. Public and private investment in new sources of energy are urgently needed to avoid a disruption in fuel supply arising from sudden economic or political turbulence would leave both parts of Ireland extremely exposed. There is a need to start investing now in long-term energy alternatives.
There is an urgent need to generate hope through investment in people, communities and skills. This is the way to surer market confidence in the long-run - a place that flourishes economically and socially and that can trade and pay its way in the world.
In this Quarterly Economic Observer an additional, frontloaded, targeted, strategic and temporary investment of €20 billion over five years is proposed - €15 billion in the Republic and €5 billion (=£4.2bn) in Northern Ireland - to begin to reverse the negative impacts of fiscal austerity. It is not suggested that this policy initiative would solve the problem of unemployment immediately or that it would secure full economic recovery. However, together with other policy measures, it would help to re-start domestic economic activity, meet vital long-term infrastructure needs, given people greater hope and make serious inroads into long-term, structural unemployment.
The funds for such a stimulus can be sourced from a mix of public, private and European/International sources with no additions to General Government Debt and with a likely lowering in the public sector deficit as a result of higher revenues and lower payments as a result of lower unemployment.