IRELAND is not Britain and their economies are not wholly comparable. But this week's decision by Moody's, the influential international ratings agency, to downgrade Ireland's credit rating from Aa1 to Aa2 carried a message for Britain's Chancellor of the Exchequer, George Osborne. Moody's said their decision was based on concern that the Irish government's programme of harsh cuts has weakened the prospect for growth. This, of course, is the criticism that many economists make of Mr Osborne's plans -- that large scale economies will stunt growth and increase unemployment and the risk of a return to recession. Alistair Darling said yesterday: If you knock out the capacity to grow, you knock out the capacity to pay your debts...By choosing to go further and faster, you don't get growth, you stall the recovery.
Most other European governments have taken a course similar to Britain's, but to a greater or lesser degree depending on local circumstances. The United States, on the other hand, continues to argue the virtue of going for growth. The choice between the two options has been debated fully in the media and informed citizens know the issues at stake. These choices are not merely between academic economic theories -- they will affect the lives of millions for a decade or more to come.
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