Ireland: Spending cuts needed
The economy is experiencing a severe contraction as large domestic imbalances correct, compounded by the global downturn and financial crisis. With the recession already well entrenched and further contraction expected, the peak-to-trough fall in GDP is set to reach 14%.
Activity will recover in 2010 but at a slow pace.
With severe pressure on the public finances, it is appropriate that fiscal consolidation has begun. Substantial spending cuts and increases in taxation are required in the coming years. Problems in the banking sector must be resolved at a reasonable cost. Competitiveness would be restored by lower wages and GDP growth stronger competition.
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©OECD Observer No 274, July 2009
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