Sir, – Noel Whelan ("Auction politics back with a vengeance", Opinion & Analysis, September 29th) referred to an intervention I made at the MacGill Summer School in July. The point I was trying to make – and perhaps I should have been clearer – is that the new euro zone fiscal rules contain the scope for public expenditure increases and tax reductions now and in the future. This is neither controversial, political, nor a defence of Government policy but rather a statement of the factual position.
To illustrate the immediate impact of these new rules, it is worth recalling the increases in public expenditure in what are now known as the boom years. Between 2000 and the 2002 election gross public spending – current and capital – increased by 37.3 per cent. Between 2005 and 2007 the increase was 25.1 per cent. In 2016, as set out in the spring economic statement, the Government has decided, in compliance with the new rules, to increase spending by up to €750 million in nominal terms. This equates to an increase of less than 1.5 per cent over the likely 2015 outturn. Similarly, it is likely that spending for 2016 will be no more than 4 per cent higher than 2014 levels.
Obviously, the context for each period differs, but it seems evident to me that our recent experience and the new fiscal rules are having an impact on decision-makers. – Yours, etc,
ROBERT WATT,
Secretary General,
Department of Public
Expenditure and Reform,
Merrion Street, Dublin 2.