The present round of economic data is pretty much the last before the Taoiseach calls the election next month. As such, current figures set out the ground on which the Coalition and the Opposition will contest the poll.
Quarterly jobs data already out reflect the sharp decline in unemployment, albeit with distinct regional variations. In coming days a new batch of quarterly national accounts from the Central Statistics Office will cast further light on the acceleration in economic growth this year.
There will be a final set of 2015 exchequer receipts in early January, but an appreciable uplift in the public finances is already clear from the November returns issued the other day. Despite valid questions over the reliability of corporate tax receipts in the medium term, these figures are hugely encouraging. The State is now within two years of eliminating the headline budget deficit.
This is significant. Minister for Finance Michael Noonan chose the public forum of an Oireachtas committee to indicate that a balanced budget was now in prospect for 2017, one year earlier than foreseen only weeks ago.
On the cusp of an election campaign, the wily Minister would hardly have said so if the target was not going to be incorporated in the Fine Gael manifesto. Given the alignment of the two Coalition parties and their determination to campaign, separately, on grounds of economic competence, it’s no stretch to foresee Labour adopting the same target.
In essence this means each party would be campaigning on the basis that their first post-election budget – next October, for 2017 – would be cast to balance the books. That rather limits scope for any outlandish promises. The reality, however, is that they cannot but do that if they are to stick with stringent fiscal rules incorporated in national and European law. They could not credibly campaign on competence grounds if their plans were in breach of the very limits they adopted in domestic legislation and put to the people in a referendum.
But there’s more going on here than blinkered adherence to rules-based economics. In the two Government parties they know private polling points to concern among voters to ensure the next administration avoids policies that would undermine the turnaround. Indeed, the “don’t blow the recovery” argument is the backdrop to Enda Kenny’s unambiguous pre-campaign assertions that he will not put recovery at risk for electoral advantage.
Similar thinking would appear to be in vogue within Fianna Fáil, whose finance spokesman, Michael McGrath, says the party also would stick by the rules and work towards a balanced budget within two years.
Fiscal moderation
This, too, is significant. It means each of the mainstream parties will be campaigning within a similar framework, one which tends more towards fiscal moderation if day-to-day borrowing is indeed to be eliminated in the first budget.
Put this another way. As it stands, Fine Gael looks like it will be the biggest party. At issue now is whether Labour makes up enough ground to provide sufficient seats for a Dáil majority or come close to a majority with friendly Independents making up the numbers.
If Labour fails to do that, then Fine Gael may have no choice but to go with Fianna Fáil. Politicians and activists in Fine Gael and Fianna Fáil may well prefer long-term imprisonment in Siberia to entering government together but the numbers might leave them with no other option.
In political terms, therefore, it’s easy enough to foresee election rhetoric which would pitch the contest as a choice between Labour or Fianna Fáil alongside Fine Gael.
Labour-Fine Gael would be cast as the “stability” option, the other a recipe for chaos. In terms of narrow fiscal targets, however, there may not be a whole lot between them. That’s no small thing.
The chatter these days suggests people accept recovery is under way and can see it, but that many still don’t see real benefit in their own lives. Hence the necessity of measures to cut tax next month and spread other benefits around.
This is a nuanced situation, however. The public act of giving back a little – but enough to make a difference – must be married with the simultaneous act of doing a lot to see recovery through. It’s a bit like two hands at work together on a piano. They’re doing different things all at once but they’ve got to be in sync.
