Since the General Election there has been a growing realisation that the economic picture -as painted by the Government during the election campaign- is none too rosy.
In the course of the 2002 General Election campaign Charlie McCreevy denied claims from the opposition that cutbacks were inevitable. No sooner was the election over than massive cut backs and stealth taxes were introduced.
Roll on 2007 and we have a carbon copy of 2002. There is likely to be a €1bn shortfall in property taxes for the full year. There are predictions of a €1.5bn deficit for the central Government Exchequer this year. Election promises have been quietly shelved and cutbacks introduced. The Government has decided to slash up to €12 million worth of funding for rural roads as part of its programme of post-election cutbacks. The HSE is introducing cutbacks in an already underfunded Health Service. Patient care will suffer.
More cutbacks and stealth taxes are inevitable.
In 2002 the introduction of massive cutbacks and stealth taxes allowed the Government to accumulate sufficient financial resources to loosen the purse strings for a two year period prior to the 2007 General Election.
We can expect the same approach from the FF-PD-Green Coalition. Savage stealth taxes and cutbacks introduced in 2007 will allow the Government to accumulate sufficient financial wherewithal to produce a feel good factor for the two years prior to the 2012 General Election. The electorate has short memories.
The Irish economy is floating on a sea of credit. Rises in interest rates are hitting disposable income.
There was a significantly higher deficit of €3,271m on the current account of the Balance of Payments in the first quarter of 2007 compared to one of €2,325m for the same period in 2006.
The economy has been over reliant on building and construction.
Manufacturing industry is gravitating towards low cost economies. Much nonsense is spoken about Ireland's supposed advantages such as the English language and education system.
In India there has been a huge output of skilled graduates who are particularly attractive to Multinational Companies. The country with the largest number of English language speakers in the world is India. There is much waffle in Ireland about upskilling. There is an assumption that there is no upskilling in places such as India Hong King and Singapore.
When Government Ministers berated the opposition- in the election debates -they failed to address the issues that really matter.
The economic road ahead appears quite rocky. Brian Cowen will probably introduce a harsh budget in 2007.