Ireland -Exchequer deficit for 2006

The exchequer deficit for 2006 was just over €1.6 billion . This was more than three times Government projections. Stamp duty receipts for 2006 were €700+ million below Government expectations, while VAT receipts were almost €400m below the level anticipated by Brian Cowen. In addition public expenditure rose by 13% in 2006. The Government was determined to win the 2006 General Election and the massive rise in public expenditure contributed to a feel good factor. This provided a harvest of votes for FF at the ballot box. The rise in public expenditure was unsustainable.

The Celtic Tiger is no more. It has floated on a sea of excessive government spending and private borrowing. It has grown flabby. The government must take the scalpel to public expenditure. The withdrawal symptoms will be severe. The growth rate for the economy will drop to around 2%. Unemployment may rise quite sharply due to the down turn in building and construction. The electorate will now pay for the good times. This is the same scenario as unfolded in 2002 in the immediate aftermath of the general election.

The rise in the value of the euro against the dollar has insulated the economy somewhat against rising international oil prices and served to depress inflation. Nevertheless the governments record on inflation is poor. Inflation currently stands at 5%. Recently on RTE Tom McGurk stated that Brian Cowen left FG flat on the floor in debates on the economy in the run up to the 2006 General Election. Not for the first time McGurk's analysis was fatally flawed.
The next massive rise in government expenditure is anticipated to occur in the run in to the next general election-expected in 2011. After all the electorate has short memories.

Sunday Business Post-McGurk argues for FF-Labour Coalition

Tom McGurk is quite critical of Pat Rabbitte under the heading "Rabbitte's long march has come to an inglorious end".This article is factually incorrect in a number of respects.

• He states that "Since the foundation of the state, Fianna Fail has been seen by the electorate-time after time-as the natural party of government. This is factually incorrect. Cumann na nGaedhael (ancestors of FG) was the natural party of government from 1923-1932. FF was founded in 1926. It attained power in 1932.


• Referring to the Labour party he states that "the result was catastrophic for the party,with Labour barely increasing its vote at all. In fact the ultimate political achievement of Rabbitte' devotion to the pact was to drag FG back from the point of extinction." This is utter nonsense. In the 2002 General Election FG secured 22% of the vote. That was not extinction. It still had a huge organisation after the 2002 General Election. How does McGurk explain the strong FG performance in the Local Elections in 2004? It got within a handful of seats of FF. It won most seats in the 2004 European Elections. This was prior to the Mullingar Accord. In the 2007 General Election there were no huge seat losses for Labour. So how was the election catastrophic for Labour?

Tom's prefererence is for a Drumcondra Accord whereby Labour would prop up Bertie Aherne.

In 1932 Labour propped up the minority FF Government. By so doing it ceded much working class support to FF. It has never recovered this vote.

In coalition with FF under Albert Reynolds Labour agreed to a tax amnesty. This cost Labour dearly. FF is Labour's greatest enemy and competitor for working class support. FF would like to kill Labour with kindness.

Tom McGurk knows that the Greens may be decimated in the 2012 General Election. If this comes to pass FF will need another coalition partner. In Tom's ideal world this will be an FF-Labour coalition. I suspect that he desires an FF led Government in perpetuity.