Ok, so as with some previous big events such as the Snip Report, it may be best to partition the discussion of the budget into a set of separate threads. I’ll put up a few topics, offering a few of my opinions as I go along.
Let’s start with a big question. Irrespective of one’s opinion of how the adjustments have been achieved, has this set of budgetary measures stopped the rot in the public finances? Will it succeed in stabilising the public finances? My guess is that it will and that, if passed by the Dail (I’m assuming it will) this set of measures will prove to be a key step on the road to fiscal stability. In particular, I would guess that participants in international financial markets will be impressed by the package and that this will help a lot in distinguishing Ireland from Greece, which could prove to be an important issue in the coming months.
The other attitude to this package is what, I suppose, one could term the ICTU approach. This would emphasise that the cuts are likely to further depress the economy and keep us in a downward recessionary spiral. On this point, it’s worth noting that the budget figures concede that the €4 billion in cuts will have a negative effect on tax revenue: Table 8 of the Stability Program Update concedes that the budget day expenditure adjustments of €3.8 billion will reduce tax revenues by €897 million, so the net reduction in the deficit relative to the baseline laid out in the White Paper on Saturday is around €3 billion.