Lenihan to go it alone after Opposition talks collapse
CUTS: ESRI warns following EU targets could lead to 'lost decade'
BRIAN Lenihan is to "go it alone" after ambitious consensus talks with opposition parties ended after just two hours.
One of the few agreements reached by the main party leaders yesterday was the necessity to reduce the national deficit to 3pc by 2014.
However, that figure was under scrutiny today after a Government think-tank warned that a flood of cuts totalling around €15bn over the next four years lead to a "prolonged period of subdued growth".
The Economic and Social Research Institute (ERSI) said the country could face a "lost decade" unless the Government moves away from the tough targets set by the European Commission. Professor Alan Barret said today that if austerity measures stifle growth then "unemployment will certainly stay in double digits".
"Ideally you would want a situation where the economy does the heavy lifting for you," he said, adding that the saving target for December's budget could be as much as €6bn.
The ESRI wants the pain to be spread over a longer period in order to encourage growth in the economy, but spokesman for EU economics commissioner Olli Rehn reiterated that only the European Council can change the four-year target.
And Brian Lenihan last night signalled his intention to push ahead with the planned austerity measures. He admitted that it was a "daunting" challenge but added that there was "no way around it".
Fianna Fail, Fine Gael, Labour and the Green Partywill now revert back to compiling their own budgetary plans ahead of a debate on the economy which will take place in the Dail next week.
The debate is likely to be a heated row with Fianna Fail and the Greens set to come under pressure for their handling of the economic crash.
But Labour will face demands to outline a clear savings policy and Fine Gael will be expected to put forward definite figures on how much it would cut in the forthcoming budget.
Commenting on the ERSI report, Labour's finance spokeswoman Joan Burton said: "A balance needs to be struck between measures which bring down the deficit on the one hand, and stimulating growth to bring down the debt burden on the other."