Capital Constraints – Balancing the EU Fiscal Rules with Ireland’s Capital Investment Needs

This IIEA policy briefing, Capital Constraints: Balancing the EU Fiscal Rules with Ireland’s Capital Investment, examines the main arguments that have been made as to whether or not fiscal rules contain an anti-investment bias that deters governments from pursuing large public spending projects. It also outlines a number of the alternative proposals put forward to incentivise capital expenditure within a rules based fiscal framework. This is a topic of particular relevance and importance to Ireland, which saw public capital expenditure cut significantly following the global financial crisis and subsequent sovereign debt crisis in Europe, and which has a particular need for public investment because of its fast growing economy and emerging demographic pressures.