The Government’s plan to inflict a €6 billion hit on the economy in the forthcoming Budget poses an unacceptable risk to jobs and growth.

However, Minister Lenihan is asking us to accept that €6 billion can be taken out of the economy in 2011, and that growth of 1.75% of GDP can still be achieved. While this headline figure may be initially attractive, the implications of such an adjustment for jobs and growth, are just as likely to undermine confidence in Ireland over time, as they are to enhance it.

The Irish economy effectively flat-lined in 2010 after an adjustment of €4billion. Now we are asked to believe that growth of 1.75% will be achieved after an adjustment of €6billion, and in the face of a highly uncertain economic environment in our main trading partners.

The presentation of the figures and their credibility will not be helped by how he dealt with the Promissory Notes.

The government’s latest manoeuvre on the bank bailout is to take an ‘interest holiday’ on the IOUs they’ve given the banks until 2013, comfortably after the next General Election. This adds about €400m to the cost of the bank bailout and leaves an appalling legacy to the next government and the people are Ireland.

The government’s latest manoeuvre on the bank bailout is to take an ‘interest holiday’ on the IOUs they’ve given the banks until 2013, comfortably after the next General Election. This adds about €400m to the cost of the bank bailout and leaves an appalling legacy to the next government and the people are Ireland.

While maintaining our support for the target of reducing the deficit to 3% of GDP by 2014, the Labour Party believes that this level of front-loading of the total adjustment is misguided, and excessively risky.

No-one doubts for a minute the serious crisis that Ireland faces. The Labour Party has been consistent in our support for the goal of deficit reduction, and we have supported the target of reducing the deficit to 3% of GDP by 2014.

The forecast contained in the document published today, suggest that total adjustments of €14 to €16 billion will be required to meet the 2014 target. Given the fragility of the Irish economy, Labour believes that an adjustment in the region of €4.5 billion would represent a better balance between the twin goals of deficit reduction and achieving economic growth, and would contain sufficient front-loading to demonstrate seriousness of intent.

Imposing a cut of €6billion risks damaging the fabric of the economy, and undermining our capacity to grow in future years. It is an unwise, and unacceptable risk to the economy, to jobs and to the living standards of Irish families.