Economic Sunshine
After all the bad news about the Irish economy, there are some glimmers of hope at last. Just to recap what happened up until now, in 2010, Ireland received a massive €85 billion bailout from the EU and the IMF. This help was received when the Irish banking sector was on its knees and the country was struggling to borrow money anywhere. The bailout came with strings attached: Ireland had to restructure its banking sector and implement reforms to return the country to sustainable growth. At considerable personal cost to many ordinary Irish citizens, these steps have been taken. The Irish government now anticipates a smooth exit from the EU-IMF rescue programme later this year. This development has been made possible by an agreement with European finance ministers to extend the life of the bailout loans to seven years.
One obvious, economic effect of the proposed debt restructuring would be to ease Ireland’s debt repayment schedule. Another, more subtle, effect is reputational. Observers are comparing the Irish and Greek responses to austerity, praising the ‘stoic Irish’ in contrast to the ‘tumultuous Greeks’. While Ireland’s success in meeting each quarterly review of its program may indeed be praiseworthy, there is now a tendency to gloss over some of the abiding questions about the causes of the whole experience and its subsequent management. These questions would include why there has been little or no attempt to bring criminal charges against some of the major players in the 2008 crash, why the Irish government agreed to take on so much debt from private banks, and whether the austerity program has been fairly applied. There are certainly considerable doubts about the answer to the last question. There is no mention of any possibility of a ‘personal audit’ of the costs to ordinary citizens of the implementation of structural reforms. It may be too early to consider this, but would there be any chance of restoring access to services viewed as quite ordinary up until two years ago? What this implementation has meant in real terms to people’s lives has been discussed in other posts on this site.
In other good news, the Irish employment figures published at the end of February showed that, for the first time since the recession, the numbers in work had continued to grow over a six month period. The number of unemployed people was reduced by a net drop of 12,000 would-be workers. The biggest increases in employment were in the agriculture, forestry and fishing sectors. This gradual reduction in unemployment suggests a slow, but real, return to economic growth and confidence.
Although unemployment levels have fallen, the percentage out of work in Ireland is still 14.2% of the labour force, or more than twice the level in Australia now and well above the 4.6% that it was in 2007. Immigration may also be accounting for part of the fall in unemployment as 46,500 Irish nationals left the country in the 12 months to April 2012.
Signs of further development include the issue of 10 year bonds, which were widely taken up, suggesting that investors believe in the long term strength of the Irish economy. President Barak Obama will shortly be meeting with Taoiseach Enda Kenny and there are hopes of a trade deal between the two countries.