The IMF have released their bi-annual World Economic Outlook report which analyses the world economy, individual countries and predicts growth prospects for the future.
The most recent report, Tensions from the Two-Speed Recovery: Unemployment, Commodities, and Capital Flows, has dramatically reduced growth prospects in the Irish economy to 0.5% for 2011, down from 0.9% a mere 4 months ago. If you compare this figure to the estimates from Budget 2011 which predicted that GDP would grow by 1.7% in 2011, you get a real understanding of the destructive impact of the deflationary policies that have been pursued since the financial collapse in 2008.
The Socialist Party have argued from the beginning of the crisis that policies of cutting wages, slashing spending on public services and increasing taxation would lead to a deflationary spiral, worsening the economic situation and destroying the living standards of workers, dashing the hopes of young people and swelling the ranks of the unemployed.
Confronted with this stark reality the reaction of the new Fine Gael / Labour Party government and the business establishment has been to prepare to impose further, more severe austerity policies. The public sector is being primed for further cuts, state assets are being lined up for privatisation and over 2,000 workers in AIB will be thrown on the dole over the next two years. These attacks are more of the same and will worsen the situation and need to be resisted.
By Stephen Boyd, Editor, the Socialist