Recovery can’t just be centred on Dublin alone

Policymakers will have to think carefully if any form of recovery is to be shared across the economy.

Dublin, according to a visitor from the US last week, is rocking. His conclusion was based on observations including the relative (compared to 2009) absence of ‘For Sale’ signs over commercial properties in the centre of the city, the nascent recovery in residential property prices, and the presence of a large number of young and employed people.

The latter should be fact as Ireland continues to have one of the lowest average ages in Europe. But it seems the influx of global multinationals is helping, too. A perusal around the area between Barrow St and the Liffey on a balmy evening suggests a buoyant environment where the likes of Google, Facebook, and Linkedin compete for energetic employees from across Europe.

Contrast that profile with any of the rural towns and small cities outside of Dublin. Here, it feels as if anyone under 30 has either moved to Dublin or abroad in search of a living.

Shops continue to shutter as local spending is squeezed amid new property taxes and the leakage of a young cohort who were more likely to socialise and spend in restaurants and retail outlets.

These small towns are the epicentre of the domestic economy collapse that continues to haunt our country. Dublin, in contrast, reflects a section of the economy which is outward facing and primed to operate in an international arena where trade flows and services are in rude good health.

The next time the troika team is in Ireland they might spend an evening in a B&B in Mullingar, Macroom, or Thurles to understand why politicians are twitchy about further adjustment measures in upcoming budgets. Staying in the centre of Dublin facilitates a group-think which concludes Ireland is faring well as it manfully positions for an exit from the bailout.

That image, however, is too narrow.

The optimist in me hopes that the positive momentum within Dublin creates a spillover effect that helps progress elsewhere. Anecdotal evidence of rising rents and house prices in Dublin, together with talk of a squeeze in commercial property availability, should highlight a widening gap between prices in the capital and elsewhere.

Homes and offices in Galway, Cork, and Limerick are starting to look relatively inexpensive so maybe the flow of foreign direct investment will filter out to other centres that share the same corporate tax and regulatory regime as Dublin.

Any multinational looking at Ireland from on high will see large parts of the geography crying out for investment and supported by local councils, agencies, and politicians desperate to reboot their local economies.

With a vastly improved road network these towns and smaller cities have much better physical (roads, broadband etc) infrastructure than applied 10 years ago.

We must hope a balanced recovery takes effect because otherwise we risk spiking costs for transnational corporations within the Dublin area while the rest of the country remains a drag on both the national economy and morale.

In that scenario, there is a risk that the rapid improvement in competitive costs of doing business in Ireland since 2009 is lost as Dublin produces renewed bubble-like price inflation. The last thing we need now is a trend that undermines our competitive advantages.

Joe Gill is director of corporate development with Goodbody Stockbrokers. His views are personal.