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More admissions that austerity does not work – Reilly

18 November, 2015

Sinn Féin Seanad Spokesperson for Finance, Senator Kathryn Reilly, has stated that many of the comments made by former Governor of the Central Bank, Patrick Honohan, at a keynote speech at the London School of Economics (LSE) were precisely what she and Sinn Féin had been saying over the past number of years.

Senator Reilly said:

“Professor Honohan’s articulation that the euro area fiscal stance as a whole was unduly contractionary and adversely affected stressed countries is precisely what progressives have been saying since the crisis began. It has been the opinion of Sinn Fein that instead of structural reforms and fiscal consolidation, the Irish government should have focused on growth led policies.

“However, this was not the case. The emphasis on fiscal consolidation and structural reform measures meant that none of the growth targets outlined for Ireland were ever reached and the austerity measures implemented caused a double-dip recession which prolonged the crisis and caused economic growth to stagnate.

“I would also agree with Prof Honohan’s assessment that Irish economic growth forecasts were optimistic. However, I would disagree that it was underperformance of trading partners that caused Ireland to struggle and not meet growth targets; it was, as I mentioned above, fiscal consolidation and structural reforms which took billions out of the Irish economy.

“Prof Honohan’s address at the LSE came only a few short weeks after the Central Bank released a paper on The macroeconomic effects of the Euro Area’s fiscal consolidation. The authors of that report outlined how “fiscal consolidation would be largely responsible for the further decline in GDP relative to its pre-crisis trend during 2011-2013.

“So what does all this mean is that in essence, this is an admission to what Sinn Féin has said since the crisis began, austerity does not work.” 

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