Category Archives: Articles for SIPTU’s Liberty

Ireland’s economic winter of discontent has given way to the green shoots of spring. While the factor 50 isn’t yet flowing in all regions of the country, and the post-2008 bust still casts a long shadow on certain cohorts of the population, there is a sense that summer is coming.

On 28 May, the government launched its spring statement. Making a virtue of the necessity for all EU members to provide Brussels with an annual update on their public finances and economic projections, the usually-dry ‘Stability Programme Update’ was dressed up in political clothing this year to herald the supposed good times ahead.

Politically, the aim is not only to give voters a heads-up on the tax cuts and spending increases that lie in store. It is also designed, on the one hand, to project the sense that the government has a solid plan for the future and, on the other, to hamstring opposition parties by increasing the risks to their credibility if they step outside the broad fiscal framework set out. It also aims to put a ceiling on the demands of public sector trade unions as part of the forthcoming ‘national economic dialogue’ by establishing boundaries.

Economically, there was little ground-breaking in the spring statement: reasonably optimistic – but not outlandish – economic growth estimates out to 2020 and a stocktaking exercise on the state of the public finances, the labour market and the state-owned banks. There was also a technical – yet important – explanation of the results of recent negotiations on the application of EU rules on Ireland’s public finances. Essentially, this boils down to an extra billion or so for the government to play with in October’s budget if they are to comply with the rules. The government has signaled that the total budget package is therefore likely to amount to €600m of spending increases and €600m of tax cuts. No giveaway, but not to be sniffed at with an election on the horizon.
Continue reading →

At nearly 5% per year, Ireland had the fastest growing economy in the EU or OECD in 2014. 1000 jobs were created every week. Between modest increases in the average wage and falls in the price of consumer goods, people have more money in their back pocket. With house prices rising rapidly, homeowners feel richer. Despite carry a debt bigger than the size of the economy, the government can borrow money cheaper than ever before.

The emerging narrative seems to be: government took the tough decisions, citizens made the necessary sacrifices, and after seven years of brutal tax hikes and spending cuts, we are on the verge of seven years of plenty. And, this time it’s different.

Across the water in the UK, Tory Chancellor George Osborne similarly took great delight in confounding his own critics, from the Labour Party to the IMF, who had said he was slashing the deficit too much and too soon. The UK has bounced back strongly compared to its continental counterparts. Case closed?
Continue reading →

In a political world of superficial soundbites and self-aggrandising short-termism, it may not arouse the passions like the ‘back pocket’ issues of budget day, but the importance of what policy wonks call ‘good governance’ goes far beyond ensuring politicians don’t lose the run of themselves with their expense accounts. And it’s not just because ‘Paddy likes to know the story’, as an Taoiseach put it!

Poor planning, regulatory failure, auction politics, weak leadership, have combined to undermine the institutions of the State and to push Ireland to the brink – and beyond – of economic catastrophe for the second time in a generation.

As a result, the people have lost trust in political parties and public institutions. And, while the majority once looked to the EU for salvation – solidarity, structural funds and progressive social legislation – now they see a more transactional relationship. It’s akin to being trapped in a bad marriage for the sake of the kids. Politically, this is manifested in the rise of Sinn Féin as well as populist independents who have zero real interest in governing the country.
Continue reading →

Writing in these pages 18 months ago, I put forward the then heretical proposition that austerity could have been declared over at last October’s budget if the government upped their adjustment by just €400m.

Painful? Yes. Electorally toxic? Possibly, but that boat had already sailed. Continue reading →

You may not feel it in your pocket, but the wounds of Ireland’s economic crisis really are slowly beginning to heal. GDP figures published earlier this month show that the size of the economy in the first three months of 2014 was bigger than at any time since the end of 2008 and exports hit a new high.

There is certainly no cause to crack open the champagne bottles, but it does show that an ‘export-led’ recovery is gaining traction. The problem is that it doesn’t feel to most people like there is a strong recovery underway.

By far the biggest component of the domestic economy is personal consumption, which has been essentially flat since the start of 2009, despite Ireland having a population that is growing quickly compared to our European neighbours. This means that ordinary people continue to spend less and less, and this is why many people don’t ‘feel’ the recovery yet. Continue reading →

One thing about the 2015 budget is for sure: the planned €2bn spending cuts and tax hikes will be watered down for reasons both economic and political.

Ever since the Troika left late last year, the government has been making noises about easing the burden of austerity on Irish families. There is also a sense that now Ireland has ‘regained its sovereignty’, and that the economic emergency can be considered over, people are not willing to wear the hair-shirt any longer. This is precisely the message the governing parties have taken from the drubbing they received in the recent local and European elections.
Continue reading →

We are a nation obsessed with the price of bricks and mortar. During the heady days of the Celtic Tiger, people would marvel that they were ‘earning’ more through the increase in the value of their home than in their wages. Having peaked in 2007, prices cratered and many of the same people, mortgaged to the hilt, were acutely aware of just how deep a ‘negative equity’ hole they were in.

The run-up in prices in the decade to 2007 was a textbook ‘bubble’, fuelled by a toxic mix of easy credit, frantic speculation and suspended belief. When the bubble burst, prices more than halved and the number of homes being bought and sold – along with the credit to finance them – dried up.
Continue reading →