Finance officials ‘warned of risks for 10 years before 2008 crash’

The Department of Finance had been warning of risks to the economy for 10 years before the crash, the banking inquiry has heard.

The current secretary general, Derek Moran, who has been working in the department since 1989, said its fiscal advice was appropriate but not implemented.

“The department had been warning of the risks to the budget and the economy for nearly a decade before the eventual crisis hit in 2008. With every year that passed while the economy continued to boom there was the real risk that the advice proffered would be given less and less regard,” he said.

“Throughout the period in question there was little in the way of domestic calls from interest groups or representative bodies for budgets to be less generous,” he said.

“Expectations and demands were so high that it was more of a question of how much more should have been done in individual budgets. The failure to run tighter policies had profound consequences for the public finances once the crisis hit.”

He said the department did not predict the scale of the crisis that hit in 2008 but insisted nobody did. It was the role of civil servants to offer advice and it was down to the minister of the day to either accept or reject that advice, he said. He said politicians had an electoral mandate and officials did not.

[“source – irishtimes.com”]