So what does prom note deal mean for working people?

Amongst all the reports of the promissory note deal there is not a lot of clarity about what it might mean in terms of any reduction in austerity over the coming years.

It has been widely reported in “what does it mean” type articles across the media that Enda Kenny said there would be a 1 billion reduction in cuts and tax increases per year.

However what he actually said was:

This will result in a reduction in the State’s General Government deficit of approximately €1 billion per annum over the coming years, which will bring us €1 billion closer to attaining our 3% deficit target by 2015. This means that the expenditure reductions and tax increases will be of the order of €1 billion less to meet the 3% deficit target.

So that would indicate that the 1 billion was actually to be spread out over the next two budgets – 500 million a year.

And I am sure I heard Michael Noonan interviewed on the radio yesterday saying that what it would mean was a decrease from the previously projected 7 billion in “fiscal readjustment” over the next 3 years to 6 billion – only 333 million a year. However I am not able to find a quote reporting this so for the time being I can’t verify it.

However the following two documented comments might indicate an even further degree of caution over what amount, if any, of reduction in austerity there may be:

Mr Varadkar said he wanted to be careful about raising expectations.

He said a deal will not mean that there will be no more austerity budgets, and neither would it mean an end to tax increases and spending cuts.

Mr Varadkar said: “We still have that primary deficit, that big gap between what we take in in taxes on one side and what we spend on the other.

“I’d be careful not to raise expectations, that if we do get a deal on the promissory note by March, that somehow this means that we’re going to see a sudden end to cuts in spending or a sudden end to tax increases, that isn’t the case unfortunately.”

SOCIAL Protection Minister Joan Burton said it was too early to say whether a deal on the Anglo bank debt will give taxpayers a break in the next Budget.

The current target is to take another €3bn-plus in tax increases and spending cuts to meet the targets set down in the bailout programme with the Troika.

Ms Burton said it was too early to say if the negotiations with the European Central Bank (ECB) would have an impact on the next Budget. But she expressed hope that it would allow the economy more time to recover by lengthening the repayment of the Anglo debt to up to 40 years.


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