Writer claims economy has bright future

THE Irish economy has a bright future according to a leading UK writer and has made major strides in the past 30 years.

He dismissed the view that the economy is destined to hit very difficult times in the next 12 to 18 months.

It will continue to benefit from EU supports and foreign direct investment as globalisation of the world economy continues.

“I believe the ESRI’s assertion that the Irish economy will have a soft landing, a very soft landing,” said Will Hutton former editor in chief of the Observer newspaper and chief executive of the Work Foundation in the UK.

Existing pessimism about the economy is overdone and reflects a lack of belief in ourselves and in what we have achieved, he said.

Ireland has emerged as an economy with the capability of the strengths of economies such as Denmark, Finland and Holland.

He was less optimistic about future prospects for the US. It will be stuck with below par growth for the foreseeable future as it is forced to come to terms with the slump in the high technology sector, he said.

“I also believe there is a 50% chance that within the next two years the EU will be called on to put a “rescue package” together to prop up the US dollar.

While the US currency has lost 20% of its value to the euro it is still over priced and he says there is a good chance it could hit a very rocky period going forward that could result in the ECB having to rescue the dollar.

In Dublin to promote his best selling book “The World We’re In” Hutton argues that the UK should align itself with the European model of capitalism and not the extreme conservative model that has dominated the US since the 1980s.

Europe has much less focus on delivering shareholder value and puts far greater emphasis on developing products that last.

Nokia, Michelin and Volkswagen are prime examples of companies driven by creating products of high value and not just value for shareholders, he said.

While a proponent of the free market Hutton believes the dominance of providing shareholder value under the conservative US model has undermined that economy’s ability to grow, more than people have yet realised, he said.

As the failure of the internet revolution becomes more obvious Hutton fears that the underlying weaknesses in the US economy, highlighted by its massive deficit will result in an outflow of funds that will undermine stock market values for some time to come and create serious problems for pension funds.

He argues that the social contract type of capitalism characteristic of Europe, where workers as well as shareholders are rewarded better, will have a more lasting impact on the global economy.

For that reason he argues in his book that the UK should join the euro and align itself with the more long standing European model where wealth is regarded as having responsibilities to the weaker in society.

He doubts however that the UK will join the euro in the short term because the UK still has difficulty with the concept of handing the EU power over its monetary policy.