Moving on from mistakes is a monstrous task
The truth, of course, is that the economy is still struggling to lift itself off the ground. Any business dependent on the consumer is likely to be in considerable stress and this will only be exacerbated by the current penal withdrawal of €550m from the personal sector to pay the full year’s property tax, not to mention the manner in which private health insurance is being priced out of the reach of many. Discretionary incomes are still being hammered. For the small business sector, these weak demand conditions are imposing considerable pain, but are being compounded by the lack of real credit availability from the banks, and the very onerous debt burden that many SMEs built up in better times.
Irish taxpayers have been forced to recapitalise the banking system and in the case of Anglo Irish Bank and Irish Nationwide to burn their money, in the process creating a dangerously high level of sovereign debt; in the face of rapidly rising sovereign debt and loss of market confidence, fiscal policy has been utterly pro-cyclical, meaning that the tax burden has increased significantly and public expenditure has been cut in the face of a deep economic crisis; and the banks have been forced to reduce the size of their balance sheets, which has seriously undermined ‘good’ lending. In such circumstances, it was always inevitable that any recovery process would be slow and difficult, and that is exactly how it is transpiring. The sad reality though is that much of this pain might have been avoided if our European masters had any understanding of how economies really work.
