Speaking at the Association of European Journalists’ lunch earlier in the week, McCreevy warned specifically about the Irish situation, arguing that “people shouldn’t kid themselves that past spending levels are sustainable” but there was also a wider message about Government borrowing.
He said: “Diminishing tax inflows cannot be replaced with ever rising levels of public sector borrowing in order to sustain spending levels that are simply not sustainable indefinitely.
“Investor appetite for government debt is not limitless and the more we borrow the more the premium for new debt we will have to pay.
“We need to guard against this – otherwise we will be propelled into a downward spiral where rising borrowing costs have to be met by even deeper spending cuts:
“The reality is that over coming years the current levels of public spending will have to be pruned and pruned hard.”