Byline: by Mary Ellen Synon
MOST of Michael Noonan's Budget forecasts are likely to be what polite economists call 'optimistic', but I call 'dead wrong'. For example, the minister thinks he can get an extra [euro]670million in revenue from an increased rate of VAT. He thinks he can get it out of an economy that is being beaten into the ground and a middle class that is being destroyed. Not likely.
But Mr Noonan's most significant forecast was the one that wasn't there at all. What was missing from his Budget was any forecast of the effect on our economy of the break-up of the single currency. International corporations are making contingency plans for the break-up. Hedge funds are factoring it into their investments. In Britain, HM Treasury has been making plans for months for the break-up. Washington is braced for it. Why isn't our minister? Horror Or maybe he and his department are.
Maybe they have been making contingency plans in secret. If that is the case, the Budget - presented by Mr Noonan as though the eurozone in which Ireland must operate in 2012 is going to look like the eurozone in 2011 - is dishonest.
What is about to happen in the eurozone is a whole new kind of economic horror, beyond any spending cuts or tax increases: the European summit on Friday is going to solve nothing - and I'll tell you why in a moment - so the crisis will roll on to its climax in the break-up of the single currency.
But let us assume the minister really believes the Budget he presented on Tuesday will take us through the next year in a world in which the eurozone will go on much the same as it has since the global credit crunch of 2007: anxious but in one piece. If so, the minister is wilfully blind.
Because the eurozone is heading for bustup, and the bust-up is going to set off shocks all over the world. Which makes Mr Noonan's Budget look like nothing but displacement activity by a neurotic minister. He is saying, 'Let's tweak capital gains tax' while in fact the eurozone bust-up is about to crash down on the economy and flatten any kinds of gains at all. 'Tweaking' becomes irrelevant.
Perhaps you've heard that the European Council at the end of this week will find a solution to the sovereign debt crisis, so there will be no single currency break-up. If you've heard that, you've been listening either to some EU ideologues or to some people who deal in fantasy.
All that is going to happen on Thursday night is that the heads of state and government of the 27 EU member states will go into dinner and be told to consider a draft agreement for economic union and fiscal control of eurozone member states. I understand from a well-placed source that they won't be allowed out again until they've agreed it, or something close to it.
The plan has been worked out by Herman Van Rompuy under the direction of the Germans, also Jose Manuel Barroso, the president of the European Commission, and Jean-Claude Juncker, prime minister of Luxembourg and president of the Eurogroup.
I say that just to point out that the only brush with democracy this plan has had is the electorate of Luxembourg (electorate approximately 400,000) when they voted to put Mr Juncker in as their prime minister.
Bust-up And that is the first and only brush with democracy the Euro-elite intend that their plan shall have. Mr Van Rompuy and his mates are determined there will be fiscal integration in the eurozone, with member states forced to change their own constitutions to set limits on debt and deficits, and to enforce balanced budgets, and submit their budgets to the new supranational powers. …