The_Banker
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Do you think we can borrow our way out of a recession?
We have the worst exchequer deficit in the developed world. Even if we can get growth to 3% (which would be next to impossible) we’d still have to cut spending by €3-€5 billion a year for the next 4-5 years just to reduce our deficit to a manageable amount. Add to that the fact that we need to come up with €7 billion a year just to pay the interest on what we’ve already borrowed.
We could always tell everyone to get stuffed and not repay anything but then we’ve have to borrow €20 billion a year at 12-15%, there’d be a massive outflow of capital from the country (bigger than the one we have already) and our banks would collapse again. In other words we have no choice but to do what we are doing. The dye was cast between 2001 and 2007. Everything that came after was almost inevitable.
Bottom line; our wealth and resulting lifestyles for the last 15 years were an illusion, funded by money that we didn’t have. We’re on the long hard road back to reality. More taxes, less money, more poverty, fewer services, bigger classes in schools, more people dying because of inefficiencies and misallocation of resources in the healthcare system etc.
Hard to argue with anything you say but it further copper fastens my belief that we as a country are a failed entity.