€Bn 2011 2012 2013 2014
2015 Total 6.0 3.6 3.1 3.1 2.0consolidation Expenditure 3.9 2.1 2.0 2.0 Current 2.1 1.7 1.6 1.6 Capital 1.8 0.4 0.4 0.4 Taxation 1.4 1.5 1.1 1.1 Other 0.7Indicative consolidation measures. Source, Irish Fiscal AdvisoryCouncil, Fiscal assessment report October 2011
1. Fiscal consolidation. d.Burden sharing
by holders of subordinated (not senior) bond debt.a. Taxes are to be raised. Carbon, property,and water taxes are to be introduced, a 3. Structural reforms to thelowering of personal income tax bands and labour marketcredits is to be pursued. a. The IMF proposed a reduction of theb. Government expenditure, including social minimum wage. Government scrapped this.protection expenditure and numbers ofpublic sector workers is to be reduced. b. Increase workplace training and internship positions.2. Financial Sector Reforms c. Government will introduce legislativea. A further deleveraging of Irish banks by changes to remove restrictions to trade and€72 billion over 3 years. competition in sheltered sectors including the legal and medical professions.b.There will be a reorganisation of thebanking sector. Smaller banks are beingmerged with larger ‘pillar’ banks.c. Increases in Tier 1 capital ratios of ‘pillar’banks.
IRELAND IS NOT THE ROLE
MODEL FOR AUSTERITY• Historical experience argues against it.• Small open economy considerations matter.• The experience of the 1980s in Ireland shows that it is possible to reduce ﬁscal expenditure in a small open economy openly courting foreign direct investment with friendly taxation rates when the rest of the world is growing and one is receiving transfers from other states whilst reducing costly unemployment through emigration.