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Austerity is Strangling Growth in Domestic Economy

23 June, 2011 - by Pearse Doherty TD

Speaking in response to the publication of the Quarterly National Accounts by the CSO Sinn Féin Finance spokesperson Pearse Doherty said “austerity is strangling growth in the domestic economy.”

The CSO figures show a 4.3% decline in Gross National Product in the first three months of this year.

Deputy Doherty said:

“Despite the 1.3% growth in GDP indicated in today’s CSO figures, the real story is the 4.3% drop in GNP. GNP is the most accurate measure of activity in the domestic economy as it excludes all price transferring by multi national companies.

“A 4.3% drop is exceptionally bad news. The Government’s strategy for economic recovery and the EU/IMF programme are based on projected GNP growth figures of 0.3% for this year and 2% for 2012.

“On the basis of the figures released today we are a very long way off meeting those ambitious targets.

“The reason for this is very simple. Austerity is strangling growth in the domestic economy. Domestic demand has dropped by 3.1%, personal consumption has dropped by 2.9% while Government expenditure has dropped by 1.9%.

“Regressive taxes such as the Universal Social Charge, cuts to public spending and failure to invest in job creation are squeezing the domestic economy.

“Rather than acknowledge this basic fact of economics the government is set to increase the pressure on domestic demand. Proposals for a household charge, water tax and site valuation charge, combined with threatened cuts to social welfare and public spending as well as changes to tax bands and credits will further contract the economy, resulting in more job losses and financial hardship for thousands of already hard pressed families.

“The government needs to wake up to the fact that pursuing the failed economic policies of Fianna Fáil and the EU/IMF will do nothing to assist economic recovery. We need a major economic and family stimulus, to create jobs, boost economic demand and return the domestic economy to positive growth.” ENDS

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