George Osborne has said, often, that Ireland is the model the UK should follow in tackling its deficit. So it’s fascinating to read a paper by Michael Burke presented at a conference in Dublin last week. he said:
2009 is the decisive year regarding policy divergence, with the overwhelming majority of the Euro Area economies then adopting fiscal stimulus while the FF-led government adopted fiscal contraction. The cumulative effects of that policy divergence are shown in the table below.
So the 'fiscally responsible' Irish policies will have produced more than 4 times the drop in real output and 3 times the rise in percentage unemployment than the (limited) Euro area stimulus AND their deficit still deteriorated more than twice as badly!
And this is what George Osborne says we should take as a model for UK policy. Just absolutely crazy, and more proof that 'the cuts won't work'.
Hat tip to Howard Reed and Jonathan Rutherford