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Labour's New Deal: Key Proposals for Economic Recovery

Issued : Monday 29 September, 2008

Labour's New Deal:
Key Proposals for Economic Recovery

Fianna Fáil has brought the Irish economy into recession and has no strategy to get us out of it. Although the recession has been made worse by the international credit crunch, it has its origins firmly in the house-price bubble which Fianna Fáil stoked, mishandled and refused to dampen. Now that the construction sector has dramatically slowed, tax take has fallen and the live register is climbing, the Government is fixated on the problems in the public finances. They have no strategy for managing the problems in the real economy. Instead, they are adopting a scorched earth approach to public spending, which will leave those least able to cope to carry the burden of their economic failures.

As the economic news has worsened, a conservative consensus has developed, that the root of the problem, and the cure, lies in cutting public expenditure. This is simply not the case. The Irish Government needs to have an economic strategy that is focused on the whole economy, on generating jobs, securing people's incomes, and maintaining strong businesses, and not focused simply on the public finances.

The Irish economy must ultimately be weaned off its dependence on construction and return to a pattern of export-led growth, focused on high value-added sectors particularly internationally traded services. In the short-term, however, it is necessary to mitigate the worst effects of the construction downturn. It is also important to take targeted measures to prevent the emergence of structural problems, which are themselves caused by the recession, and which have the potential to delay recovery further.

As the fallout continues from the turmoil in international credit markets, the Government must develop a strategy for economic growth and development in an era of much tighter credit conditions. It must also review and strengthen Ireland's system of regulation for financial services and be a leader in demanding greater international regulation of the financial services sector. It is time for a return to an economics that that promotes economic development as a means to social progress.