Former taoiseach and austerity cheerleader John Bruton appeared on Newsnight last night to tell the British public how great we’re doing in Ireland as we exit the bailout.
He was joined by Ann Pettifor, Director of Policy Research in Macroeconomics (PRIME).
And she was having none of it.
Jeremy Paxman: “John Bruton what do you think is the lesson of the Irish experience?”
John Bruton: “Well, I think the lesson of the Irish experience is that you have to invest in the long term. We have over the last 30 years developed a very strong foreign direct investment sector, you have mentioned technology, medical devices, pharmaceuticals, financial services. Also, we have made this a country where it’s very easy to set up a new business – the bureaucracy involved in establishing a new business is quite small – and that has encouraged a lot of Irish people to set up businesses, spinning off from the hi-tech sector and has enabled us to be in a situation now, where our services exports actually exceeds our goods exports. So we are a very dynamic economy, and we’re also an open economy – in contrast to say Greece, Portugal or Spain – where they basically trade within their own nation. We import and export much more…”
Paxman: “Ann Pettifor’s here, if I may, sorry to cut across you there. Ann Pettifor, it’s a very mixed picture, when you see a lot of young people emigrating, a lot of people have had to take serious cuts in their living standards and worry about making ends meet – according to the IMF and the European Central Bank, this is an economy that’s resurgant?”
Ann Pettifor: “And I heard Joe Lynam say that as well, and actually there’s been an up tick in the quarterly numbers on GDP, but the European Commission says that the economy continues to contract – on an annual basis. So we have very high levels of unemployment, we have incomes falling, we have households with 200% of their debt to disposable income and we have a country that is effectively evicting a whole generation of its people, 1,000 people a week – and it’s a tax haven. So I mean, really to talk, or to think…”
Paxman: “You wouldn’t think you were talking about the same country?”
Pettifor: “Well exactly. I think that there’s a lot of spin going on about Ireland and I think that really, the economy has not been restructed – not a lot has changed since the crisis.”
Paxman: “John Bruton, do you…”
Bruton: “Well I’d just like Ann to know that at the height of the crisis, we were losing jobs, numbers employed were being reduced by 8,000 a month – we’re now adding jobs at a rate of 3,000 per month – and that has changed completely. And Ireland is not a tax haven – Ireland has made a deliberate decision to have a low corporate tax rate, but that’s a transparent system of taxation with no special deals for individual companies like you see in certain continental european countries. Of course we do have a problem with personal debt, that’s how we got into the difficulty we’re in – but the level of personal debt is being reduced and the Government has, on every occasion met the fiscal targets that it set for dealing with its own financial problems.”
Pettifor: “But John, you must admit that one of the reasons why Ireland is having trouble accessing the ESM, is that Ireland’s European partners are really quite angry about the corporate tax levels – the fact that they are effectively subsidising Ireland.”
Paxman: “This is another argument entirely, altogether?”
Bruton: “No, no, we are being lent money by our European partners, upon which we’re paying interest. That’s not a susbsidy. What that is, is a deliberate decision by our European partners that they want to keep the European Single Currency together – they do not want Europe going down the route of devaluation and inflation of the sort of kind that we saw during the ’70s and ’80s. They are building a single currency which involves a measure of solidarity – and that solidarity is being shown to Ireland, and we appreciate it, and hopefully, in due time, we’ll be able to repay it.”
Pettifor: “My point was that Ireland was doing the reverse (of building solidarity with its European partners) by undercutting her partners in tax terms on her corporate tax levels, this is causing quite a lot of anger not just in Europe but also in the United States.”
Bruton: “No that’s simply not true. Ireland has had this tax rate since 1956.”
At which point Jeremy Paxman cut to an interview with Lady Gaga.