Leo Varadkar is standing by his Government’s “slow and steady” approach to reopening the economy, and there may be a need for widespread borrowing to help Ireland recover from the economic fallout from Covid-19.
Mr. Varadkar hit out at people suggesting the government should borrow many billions more euro to pay for anything and everything, saying there’s no such thing as free money.
He warned that countries in the most debt would bear the biggest impact of a further downturn in the international economy
Mr Varadkar said that there would be “substantial” borrowing to pay for the provision of public services, but that this challenge would differ from the financial crisis of a decade ago because Ireland was not “locked out” of financial markets.
“On the upside, we have not been shut out of the money markets as we were 12 years ago, and at least in part due to the policies of the outgoing Government and the Government that preceded it, we retain the confidence of the European institutions and capital markets.
“I am concerned that there is a growing belief that we can as a country borrow cheaply forever and that this is the solution to all our problems. This is the “free money” argument and it is coming from the right as well as the left. There is, however, no such thing as free money. Borrowed money, debt, has to be serviced, that is, the interest on it must be paid every year. This will be a new and recurring charge on our public finances and it will have to paid.”
Mr Varadkar said that he was not comfortable with the idea of refinancing to push the debt further down the road. “Some will say this does not matter because it is a problem for someone else in ten, 20 or 30 years’ time. I do not agree with that attitude. That someone will be us or, if not us, our successors, children and grandchildren. “
