Noonan calls on shoppers to save economy

FINANCE Minister Michael Noonan has said increased tourism and shopping spends are needed to rescue the economy from crisis, as figures showed homegrown companies once again hit by a dramatic slump.

CSO figures confirm a strong showing by net exports, up 20.6% over 12 months, and continuing to be the key driver of economic growth, as domestic demand stays weak.

Measured in GDP terms, the economy grew 1.3%, but that contrasted with a sharp dip in GNP which was down 4.3%. GNP is regarded as the truer measure of performance as it excludes the profits of the multinationals based here.

The figures prompted Mr Noonan to call for a consumer spending splurge.

“The focus was on the tourist industry and of course what we really need is for people to go into the shops and start buying again. If that starts, with tourists visiting our shores stimulating the retail side, and is followed by our own ordinary citizens going about their shopping and beginning to spend again, then we begin to lift out of the crisis.”

Mr Noonan said the figures were encouraging and dismissed suggestions that the domestic economy was in free fall.

Reaction to the figures was broadly positive, but Alan McQuaid of Bloxham said while the figures were no major cause for concern, “it is not totally out of the question that the economy could contract for the fourth year running in real terms”.

Meanwhile, Mr Noonan said the Government expects to spend €9 billion less than originally forecast on propping up Ireland’s troubled banks.

The Government had said in March that €24bn would need to be spent on repairing the banks’ balance sheets.

But Mr Noonan yesterday outlined how funds from burning subordinate bondholders, bank asset sales and private investment would cut that amount by €6bn.

He said the Government also does not expect to rely on spending a €3bn contingency fund when recapitalising the banks, meaning €9bn less in total will be required.

Meanwhile, Greece was under intense pressure last night to agree to a further round of swingeing tax hikes and spending cuts to secure a second multibillion-euro loan to prevent it going bust next month. The parliament in Athens must pass the austerity measures, including the sell-off of state assets, during a vote on Tuesday, but the main opposition party leader told EU leaders that it was too much for his country to bear.

Taoiseach Enda Kenny said in Brussels the Greek vote was “absolutely crucial to the future of Europe… The consequences are not just for Ireland — they are for the European Union”.