Today one Finance Minister in the British Isles cut spending, cut borrowing by 1 per cent of GDP compared to his last Budget and cut the national debt by 5 per cent. It wasn’t Alistair Darling.
Brian Lenihan cut Irish public spending by 7 per cent (equivalent to a £40 billion cut in the UK). He cut the public sector headcount, pay, pensions for new entrants and unemployment and child benefits.
Alistair Darling postponed the inevitable reckoning on the finances until the pre-election Budget, the post-election Budget or a currency or debt crisis if that comes first. Brian Lenihan gave us the flavour of what that reckoning will be and how it will be argued.
His arguments against further borrowing and taxes and in favour of spending cuts stand repeating:
“Some have argued we should continue to borrow and wait for the economy to grow again before tackling the budget deficit.
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