Has much changed in our ‘cute hoor’ nation?

Is this country capable of long-term economic sovereignty? It might seem like a moot point now given that the financial management of the country will be increasingly handed over to Brussels. But it still matters.

Since gaining independence, the economy has hit the buffers on a number of occasions. Erroneous policy decisions throughout the 1980s meant it was an economic wasteland for most of the decade. A brief period of enlightenment took hold in the early- to-mid 1990s, but the Bertie Ahern-Mary Harney axis made sure all the good work unravelled from 1997 onwards.

It would be unfair to pin the blame exclusively on domestic factors. The adoption of the single currency brought with it a completely inappropriate monetary policy. The economy was clearly overheating for much of the last decade.

Moreover, regulatory failures that caused the catastrophic collapse of the banking sector had much to do with the absence of a pan European approach. The financial system became globalised but the responsibility for regulation remained at the national level. These were huge contributory factors to the demise of the economy in 2008 and the subsequent EU/IMF bailout in November 2010.

But trying to excuse Ireland’s plight by laying the blame exclusively on the euro or the collapse of Lehmans is either grossly simplistic or completely self serving.

During the noughties, this country had one of the most irresponsible fiscal policies among OECD countries. The Government seemed to think that it was possible to ramp up expenditure across the board and narrow the tax base to stamp duty.

The Government came to power in March 2011 on an agenda of reform and making a break from the past. Apart from a botched attempt to scrap the Seanad, there is very little evidence of this reform crusade.

It is true that it set up the Irish Fiscal Advisory Council (IFAC) which is supposed to advise on what is the most appropriate course for fiscal policy. So far it has been completely ignored. In fact there is no evidence to suggest that the Government is aware of its continued existence.

In the run up to last Tuesday’s budget, IFAC had been adamant that the coalition should stick to the €3.1bn fiscal consolidation package. Indeed, it advised that the Government should opt for cuts greater than €3.1bn in case growth came in lower than forecast.

In the end Ministers Michael Noonan and Brendan Howlin announced a budget of €2.5bn of tax increase and spending cuts.

However, it also has to be noted that this Government has done a decent job in restoring fiscal rectitude. But in view of the quarterly targets that had to be reached in return for the troika dispensing monies from the €67.5bn bailout fund, had it any choice?

As long as this country remains part of the euro, the budget will be prepared with tight oversight from the European Commission. The main banks will be regulated by the ECB as part of a new EU banking union, which should minimise the possibility of the system turning into a reckless giant hedge fund in the future.

So does it really matter whether we are capable of self-governance? Yes, it does. It matters a great deal.

The monumental failures leading up to 2008 wasn’t just about a system of economic governance or the cut and thrust of politics, it was also about a mindset. A UCC academic once wrote a paper about Irish people called, “strokes, cute hoors and sneaking regarders”. In a way it sums up perfectly the prevailing mentality of the Cabinet and boardrooms across corporate Ireland for far too long.

Has that really changed? If it hasn’t, then as the memory of this crash recedes, the next economic malaise won’t be too far behind.

* John Walsh is Irish Examiner business correspondent