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'Defaltion would be disaster for Ireland

Thursday, April 10 15:48:03

Congress General Secretary David Begg has warned that the "spectre of deflation now threatening Europe could spell disaster for Ireland, causing serious job losses, increasing the debt burden and creating a vicious circle of decline."

Mr Begg was speaking ahead of a major economic conference hosted by Congress, in Dublin's Mansion House on Friday, April 11.

The conference 'A New Course for Better Times' will focus on the creation of a blueprint for post-Troika Ireland.

Mr Begg said:"Deflation is a potential disaster for heavily-indebted peripheral countries, like Ireland. Last month average European inflation dropped to 0.5 percent. When prices start falling consumer demand collapses and with it goes employment."

"Your debt burden also increases. And if more is needed to repay debt, there is less to spend on goods and services. It is a vicious circle of decline," he explained.

"We urgently need to see a resumption of robust economic growth for debt sustainability - something we will be discussing at Friday's conference - but currently there is no strategy for durable growth anywhere in Europe," Mr Begg said.

"Policy on inflation is not simply a technical issue - it is actually an issue of class bias. The main beneficiaries of extremely low inflation are the very wealthy. Normally they would have to put their wealth to work or see its value eroded. But with low inflation they can afford to hoard cash and avoid risk."

"And without investment jobs will not be created," Mr Begg said.