Budget 2027: The Irish Economy And The Strange Myopia Of The Left

There is a standard tale of a group of blind people trying to describe an elephant. One feels the trunk, another the tail, another the knee. For lack of an overview,  they are unable to come up with a general description. 

A similar phenomenon can be seen in relation to the recent Irish budget and overall Irish government strategy. At the moment the main discussion centres on negotiations for a public sector pay agreement. Before that it was the mundane discussion of gains and losses for individuals and families. Complaints from economic observers are largely ignored, as is the sustainability of the state's reliance on corporation tax. The housing crisis is shrugged off, as is the purchase of US fracked gas at high prices and the pursuit of data centres despite the cost of energy and stress on water supplies. The biggest gap in the discussion is the one that ties it all together - a determination to remove choke points and maximise the level of imperialist investment in Ireland. 

There is also a general blindness to a political outcome of this pro-imperialist project - a growing militarism and enthusiastic participation in European mobilisation towards war with Russia.   While many countries in the global south have tried to at least hedge their bets with back channels to Russia and China,  Ireland is at one with the US and Europe in supporting war with Russia, war with Iran and quiet support for ongoing Israeli genocide in Gaza. 

The return of Trump to the White House was followed by the imposition of tariffs on Europe and its capitulation (later stymied by the Supreme Court) and a growing chaos in the international financial system.  

In July last year the Dublin government announced a National Development Plan  for the period 2026-2035.  Essentially it was a plan to double down. All internal blockages to transnational capital were to be swept away in the hope that Ireland could maintain the flow of capital that held up the economy. All of the economic measures around the budget and the majority of political decisions were taken within this framework of reference.  

The reportage on the October budget was of the fixed form the press uses: a summing up of how different sectors gain or lose from budgetary changes. The response was negative. Although there was an increase in the minimum wage and in various welfare payments,  it was generally agreed that the sums involved would be swept away by the rising global economic instability, by rising energy costs and by the tide of inflation.  

Within the budget enormous importance was placed on tax changes. These greatly benefited the well off, but marginal changes were supposed to please workers. No-one pointed out that a low-tax economy is a retreat from state spending. The most stupendous  element of the budget was that 6 of every 7 euro of expenditure were to come from a narrow and unstable, though very large, corporation tax income. 

A telling aspect of the budget was a new Investment Account that allows tax-free investment in stocks and shares up to €50,000. Not only state funds, but personal funds are to be thrown into the enormous gamble by the state. 

The budget generally has seen warnings from statutory bodies such as the Fiscal Advisory Council. A surplus of €9 billion is supported by €23 billion in transient corporation tax, that is - money that Ireland takes in as a tax haven and which can be withdrawn immediately.  If these funds were withdrawn, a €9 billion surplus would translate immediately into a €13.4 billion deficit.   The worry used to be that Ireland was reliant on a few sectors.  Then it was a few companies and now just a few products.  

A large element of expenditure is in housing, but state spending is mostly not direct, so these funds  are used to encourage investors and developers.  Over years this has meant a catastrophic housing crisis, with mortgages unaffordable, crippling rents and a lack of tenant rights leading to mass evictions.  

Large sums are also pledged to infrastructure and energy. However this in the context of the government's pursuit of data centres and providing water and energy to these. The water service is under significant pressure and electricity prices are the highest in Europe.  The government answer is storage for US fracking gas at well over six times the price of previous rates. 

It's worth noting that a significant element of the current budget is the abandonment of carbon taxes, even though global warming is leading to seasonal flooding in southern and western counties at immense expense for citizens. This is bound up with a subsidy of diesel prices following a revolt by farmers and hauliers.  

When the trade unions asked for more general subsidies for the working class they were brushed aside.  Anger at this and a public sector pay offer that would cut workers living standards led to a major strike and the immediate resumption of talks. Unfortunately, as the trade union leadership cried following the energy brush-off: “we're the good guys”. It is all too likely that they will settle in the government's favour.  

The economic dependence of the Dublin government cannot be separated from a rapid militarisation and the drive to war. The Irish state has more than doubled its military budget, is signing up non-citizens to the army and has integrated into European and NATO structures aiming at war with Russia. 

We have been here before. Following the 2008 credit crunch the state guaranteed all bondholders. We ended up paying 46% of the total European banking debt. That led to a collapse of the banking sector and the handing over of the economy to a Troika that provided a loan (still ongoing) and then oversaw an €11 billion cut in state funding. (Cuts in public sector wages and pensions are also baked into the current system). 

The thing is that the trade union leadership agreed to the guarantee and accepted the Troika budget and the subsequent cuts. The reformist left stood with the Union leaders. The result is a sort of fantasy football league politics where the union leaders are urged to be more militant and Sinn Féin are presented as a left party. 

No. The Irish state is firmly in the control of imperialism and of our own comprador capitalist class. A new resistance will be anti-imperialist and will fight for a worker's republic and a United Socialist States of Europe.