The Government is holding hostages to fortune in its assertion that recent economic data vindicates its budgetary policy and is continuing to facilitate sustained economic growth. Far from being sustainable, even a casual analysis of recent figures from the Central Statistics Office reveals an economic growth pattern that is becoming more imbalanced by the month.
And rather than encouraging sustainability, the Government has engineered a massive injection of funds into the economy - through SSIA proceeds and an increase in public spending of 13 per cent this year - in advance of the next election.
The adverse effects of this policy, which has exacerbated the impact of a credit boom, are everywhere to be seen. The most recent CSO National Accounts data revealed an economy that is desperately dependent on the borrowing consumer and the construction industry to generate growth. Exchequer returns on Tuesday confirm an astounding growth in stamp duties and capital taxes during the first quarter. House price growth continues unabated, while consumer and producer price inflation is rising alarmingly, driven by double-digit growth in retail sales. In the meantime, the Government is increasing spending at a rate not seen since 2001, the last pre-election year.
As the domestic economy overheats, signals from the external economy are becoming more worrying. A global pick-up is occurring. But Ireland's inability to benefit from this is clear from the poor performance of net exports in the latest economic growth statistics. The most significant effect of this pick-up will be rising interest rates. The European Central Bank left rates unchanged when its governing council met on Thursday but it is widely predicted that they will end the year some three quarters of a percentage point higher than now.
Oil prices rose again this week, approaching a new high of $68 per barrel, as the United Arab Emirates' oil minister warned higher energy prices are here to stay. And on Tuesday, Forfás underlined the significance of such developments to our economy, showing Ireland to be one of the world's most oil dependent economies.
The effects of these trends on our economy are nascent, but threatening. Yesterday's survey of consumer sentiment by Irish Intercontinental Bank and the ESRI revealed a sharp decline in confidence during March. A spate of redundancies has occurred in recent months, driven by a serious loss in competitiveness. This has caused the number of survey respondents worried about job losses to rise from 39 per cent in February to 53 per cent in March.
And yet, just as external and internal conditions become more challenging, the Government's attitude to the macro-economy has become more imprudent. With more than a year to go before the election, it still has time - as well as one more budget - to adopt a more cautious approach. It should do so.