'Huge Contradiction' in ESRI Position

11 May 2011

Congress has rejected calls for deeper spending cuts from the Economic & Social Research Institute (ESRI) as they would push Ireland much deeper into recession and have "terrible social consequences."

Congress General Secretary David Begg also queried the body's track record, noting that the latest call is a complete reversal of the ESRI's position of just seven months ago, in Autumn 2010.

"Just a few months ago, the ESRI was warning that planned Government spending cuts were too big and could tip the country into prolonged recession. That was in October 2010, when Government planned to cut just €4 billion - but it went on to cut over €6 billion in the budget. And we are living with the negative consequences of this austerity, with suppressed demand and bigger job losses," Mr Begg said.

"Previously, the ESRI warned that we were going too far and too fast in terms of cuts. They said we should slow the cuts and extend the period of deficit reduction to 2016 - a proposal first made by Congress. Now they've reversed that and say we need to go much further and much faster. Which is it?

"To my mind, this raises questions about the credibility of the ESRI," Mr Begg said.

In its Autumn 2010 report, the ESRI said: "We have grave doubts over the wisdom of the parameters of an austerity programme where such a high level of savings will be sought in such a tight time frame."

The Institute warned this would have "severe implications for growth."

"Leaving aside the serious inconsistency in their position, the ESRI's latest recommendations would tip the economy into deep recession and could have terrible social consequences for very many people who are already struggling with debt and reduced incomes.

"The Institute cannot divorce itself from the consequences of what it recommends and the potential damage to peoples' lives. And ultimately, that is what this is all about - the quality of peoples' lives. It is not just an accounting exercise," Mr Begg said.