Our ladder’s gone

There are various ways to summarize the vision represented by Budget 2010.   One is provided by taking a look at Table 10 in the Stability Programme Update which sets out the path to get us back to the Maastricht limit of a general government deficit at 3 percent of GDP by 2014.

An important number is “Gross Voted Current Expenditure”.    This tells us the total amount to be spent by ministries and government offices on everything except the capital budget and is thus an indication of what we should expect from the government in terms of services and transfers over the next few years.  And the words “gross” and “voted” are significant; gross includes spending that is funded by money earned and retained by departments (e.g. fees) and voted excludes payments that the government is obliged to make, notably interest payments on the debt, which will rise sharply over the next few years as total debt rises.

So anyway, the stability program says that this agggregate current expenditure number will be €54.9 billion in 2010 and … €54.9 billion in 2014.   In other words, the 5 year budget strategy is predicated upon a complete spending freeze over that period on current spending.   One would expect budget projections over multiple years to build in room for inflation, population growth, and possible changes in demand for public services towards more expensive items (e.g. more students in third level or more intensive healthcare needs due to population ageing).

We’ve now been told that the EU has been told that not a cent more will be allocated for these factors.  Thus the plan is, quite literally, to run a future Ireland on the same budget as the current one — that there won’t be any more of us and that we won’t be consuming any more public services than we are now.  This doesn’t sound like the plan of a country that expects to be going anywhere (heightened emigration prospects not withstanding).

Apparently the European Commission and European Central Bank are now ordering the Greeks to be more like Ireland.  But the Greeks don’t seem like a Brian Lenihan crowd: they’ve had the riots even before the budget cuts.   Let’s see whether Athens or Dublin has more vitality in 5 years.