Monday 11 December 2017

Andrew Lynch: Pre-election budget biggest test yet of Lenihan's mettle

So now we know.

Brian Lenihan has confirmed all our worst nightmares by admitting that the deficit correction really will be as high as €15bn over the next four years, precisely double what the government claimed just a few months ago.

This means that next month's budget will not just be the most economically challenging in the history of the State -- it could also determine the shape of politics for the next decade and beyond.

Between now and December 7, Lenihan will have both a good angel and a bad angel whispering in his ear.

The good angel wants him to take the tough decisions now so that the country can get back on its feet as quickly as possible. The bad angel warns that this would be political suicide and urges him to postpone the really savage cuts until next year when Michael Noonan or Joan Burton will be reading out the Budget speech instead.


Although the government could in theory last until May 2012, almost everybody in Leinster House suspects that Brian Cowen's majority will run out at some point next year. In normal times, a pre-election Budget is used to dole out as many goodies as possible and buy some of those crucial floating voters. Right now, however, Fianna Fail are so low in the opinion polls that they are certain to be turfed out of office no matter what they do.

This is the crucial factor that should give Lenihan the courage to ignore his own backbenchers and produce a budget that really will put the country's interests first. For decades now, successive governments have ignored or taken the soft option on certain issues that were thought to be too politically sensitive. These include property taxes, social welfare reforms, public service pensions, child benefit and third-level fees.

A Budget that grasped all these nettles would certainly leave FF with plenty of painful stings. However, it should also persuade the international markets that Ireland really is serious about cleaning up the giant financial mess that we created for ourselves. If the government funks it with just another holding operation, the international markets may decide that Ireland is the next Greece -- and if we can't borrow any money next year, then we really will be staring into the abyss.

With less than six weeks to go, all the indications are that Lenihan is headed in the right direction. As well as quoting the old Rod Stewart song by warning that the first cut will be the deepest, he seems to spend more time listening to the EU's economic commissioner Olli Rehn than his own TDs. Although this won't do his chances in the next FF leadership election any good, it's probably a wise decision -- since the deceptively mild-looking Rehn now holds our economic future in the palm of his hand.

Besides, a Budget that front-loads the pain might not be as politically crazy as it seems. If it managed to convince people that the worst was over with, FF could even get some credit for having the guts to take some hard decisions. The opposition would make plenty of noise, but they would also find themselves with an awkward question to answer -- which of these cuts will you actually reverse when you're in power?


In an interview with this newspaper at the Department of Finance last year, Lenihan pointed to a picture of Ray MacSharry and joked, "My hero!" This was a telling remark, since MacSharry was the minister whose savage Budgets paved the way for economic recovery back in the 1980s. He got precious little thanks at the time, but many people now regard Mac the Knife as a hero -- and if Brian the Butcher shows the same courage, he could one day share that accolade.

Brian Lenihan described his first Budget as "a call to patriotic action". He needs to make sure that his last Budget fits that description too -- because if ever there was a time for normal party politics to take a back seat, this is it.

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