THERE IS too much media focus on Irish bank liabilities and too little on the huge gap between the Government’s daily spending and its revenue, according to former taoiseach John Bruton.
The chairman of the Financial Services Centre said it was important that a new national consensus of despair did not take hold.
“Looking at our national economic situation now, I feel we are focusing rather too much on the liability of the banks, and too little on the ongoing huge gap between the Government’s daily spending and its daily revenue,” he told the Young Professionals’ Network at the Institute of International and European Affairs.
He said the net liability of the banks would be a finite amount, even if the exact figures were not available yet. “It will be a one-off liability for the taxpayer, probably about 15 per cent to 20 per cent of our annual gross domestic product. That is a huge figure, but we should be able to spread it over a number of years, if we manage things properly,” he said.
The much more vital issue was the gap between spending and revenue, running at 10 per cent of GDP, every year, year after year. “That is not a one-off figure. It is something that could require us to add the difference to our debt year after year, inexorably multiplying the total amount we owe.
“I would prefer if the energies of our lively economic ‘commentariat’ were devoted as much to how we can bridge that recurring gap, as they are to the one-off banking liability,” he said.
The recurring gap between spending and revenue was something the Irish people would have control over, while the banking liability had already happened, he added. “It is the gap between ongoing spending, and ongoing revenue, that worries the more thoughtful participants in the financial market. If we had a budget surplus, the problems of Anglo Irish Bank would be seen in a different light.”