Adam Smith Institute

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Remember, remember

This is a good time to remember what our shadow chancellor, Ed Balls, said about the Irish austerity package. When Ireland's second quarter growth last year was lacklustre, he said, “These figures are a stark warning to governments across Europe including our own. That is not a credible economic strategy because lower growth and fewer people in work and paying taxes ultimately leads to a bigger deficit, not a smaller one.”

And what, asks Anthony J. Evans in City AM today, has happened since then. He lists the following:

• Ireland’s gross national product is now growing.

• Domestic demand is rising.

• Bank deposits are rising too.

• Bond yields are now under 10 per cent.

• Unemployment has continued to rise, but has slowed from the spring 2008-autumn 2009 spike.

To the unbiased observer, this might seem to suggest that Ireland's austerity package shows signs of delivering the goods. Ireland is not out of the woods yet, and its national debt (the true value of which is obscured by the existence of the NAMA "bad bank" and the government's stake in the still-risky financial sector) should be sobering to any optimist.

But the signs are quite promising, and seem to have achieved rather more than the 'borrow your way of out debt and keep spending' policy that Mr Balls was advocating and still is. I can safely predict what he will say about Ireland's performance: nothing.

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