Dublin Council of Trade Unions

Reason 4: Spending Cuts are Worse

There is little question that spending cuts are more damaging to the economy than tax increases.  The ESRI has studied this issue twice and found the following.

€3 billion in spending cuts will drive down the domestic economy by nearly 2 percent.  On the other hand, €3 billion in tax increases will reduce growth by less than ½ percent.

Because spending cuts are so much more damaging, they are less successful at reducing the deficit.  Again, according to the ESRI, a package of €3 billion in spending cuts will reduce the deficit by only €1.8 billion.  €3 billion in tax increases will, however, reduce the deficit by €2.4 billion.

And the more that tax increases hit high income earners, the less damaging it is to growth and the more the deficit falls.

The Nevin Economic Research Institute has also found the same thing – spending cuts are more damaging than tax increases.

The Government is not only targeting public services and social protection recipients in its budget; they are doing so in the full knowledge that this is doing greater economic damage while being less effective in reducing the deficit.

Why should we march?  To stop the damage that spending cuts are doing to the economy and society.  The facts are on our side.

Download PDF here: Reason 4 Spending Cuts


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