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Politicians set to feel the pain of our ‘austerity fatigue’ will hurt politician

It’s official, the Irish people are suffering from “austerity fatigue”.

No, that’s not me talking but Robert Watt, the secretary general of the Department of Public Expenditure and Reform.

Addressing a conference in London Mr Watt acknowledged that we are feeling the ill-effects of “austerity fatigue” in this country.

This should hardly come as a surprise to anyone with eyes in their head. The signs are all around us.

From the threatened Aer Lingus strike during the June bank holiday weekend, the furious reaction of the IMNO, attempts by the HSE to make nurses work longer hours and public sector trade unions threatening to submit demands for pay increases next year.

However, by far the biggest indication of “austerity fatigue” is likely to come when the ballot boxes for the European and local elections are opened next weekend.

While virtually all of the 
media attention has been focused on the troubles of the Labour Party, the truth of the matter is that all of the established parties, Fine Gael and Fianna Fail as well as Labour, are in serious trouble.

The most recent opinion polls show the traditonal Big Three’ of Irish politics with a combined share of just 54pc of the vote in next Friday’s elections - the local election results will almost certainly provide a more accurate guide to the true state of public opinion than the European elections.

disillusioned

Even a decade ago the notion that the “Big Three” would struggle to achieve half the vote would have been utterly unthinkable.

That such a situation has now come to pass shows just how disillusioned voters have become with the established parties. That’s “austerity fatigue” writ large.

Unfortunately, even though Mr Watt acknowledged the existence of “austerity fatigue”, it is still not clear if either he or his political masters “get it”.

In the course of his speech Mr Watt said that austerity had “worked so well” in Ireland that the yield on Irish Government bonds had now fallen to just 2.6pc.

What Mr Watt didn’t say about austerity is that attempting such a policy in the teeth of the worst economic downturn since the Great Depression 80 years ago is almost certainly self-defeating.

Traditionally, governments, central banks and international economic bodies such as the IMF had operated on the basis public spending cuts reduced the overall value of economic output by 50 cent.

Then in 2012 the IMF admitted that it had got austerity completely wrong.

In that year it published a report which stated that instead of reducing the value of economic output by 50 cent, every €1 of public spending cuts or tax increases reduced the value of economic output by between 90 cent and €1.50.

goodwill

The IMF report blew the case for austerity completely out of the water. But nothing 
happened.

While one-third of the Troika admitted that it had got things wrong, the other two-thirds - the EU and the ECB - carried on as if nothing had happened.

With Ireland still very much dependent on the goodwill of our masters in Brussels and Frankfurt, this meant that we had no choice but to stick with the discredited austerity policies.

Will voters succeed in halting austerity where the IMF 
failed? It would be nice to think that they could, but don’t bet on it.


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