Fórsa general secretary Kevin Callinan has said newly proposed economic rules - published at the end of April by the European Commission - risk the return of austerity at a time when most EU states are still recovering from a decade lost to EU-led austerity.

Kevin, who is also the president of the Irish Congress of Trade Unions (ICTU), said the new proposals betray a failure of the European Commission to learn from its own mistakes.

Current rules limit member state budget deficits to 3% of GDP, and debt to 60% of GDP. However, these have been suspended since 2020 in response to the economic consequences of the pandemic. The suspension is to end in 2024.

Kevin said: “These new proposals would mean that, from next year, any member state with a deficit above 3% will have to make a minimum fiscal adjustment of 0.5% of GDP per year.

“There are currently 10 member states with a deficit above 3%. It means those states will have to begin making choices about spending cuts next year. This, in turn, risks opening the way back to austerity.

“The same rules will also mean that member states cannot meet the EU’s own targets for investment in the green and digital economy. We can ill-afford a failure to meet the climate challenge, and these proposals risk doing exactly that.

“We need to face the fact that most EU states, including Ireland, are still dealing with the legacy issues of the decade lots to austerity in the wake of the 2008 economic crisis.

“The housing crisis is driving yet another generation of young Irish workers to pack their bags for better prospects outside the EU. This is a real legacy issue of the decade we lost to austerity, and is further contributing to a growing labour shortage in a number of key sectors.

“The Irish Government is literally awash with huge revenues, which are expected to grow. The Government needs to spend this money wisely, and that means investment.

“What’s needed at EU level is a ‘golden rule of public investment’, ensuring an adequate level of current spending, which would ensure that net public investment is excluded from balanced budget rules.

“By continuing to protect public investment – at a time when it’s so urgently needed - we can guard against the blood-letting approach of austerity, the legacy of which we are still tackling, despite the robust fortunes of the Irish economy.

“Equally, if over-restrictive EU rules prevent Irish governments from taking necessary action in the interests of the Irish people, it will jeopardise popular support for the entire European project. We’ve seen how damaging that can be close up.

“The Commission must learn from its past mistakes and amend these proposals before 2024,” he said.

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