Vulture funds attracted by fresh growth

Perhaps the last government, which is now the caretaker government, has itself to blame for the emergence of a breed of vulture that we haven’t witnessed in this great little country for a few years.

I am not referring to the vulture funds who have been virtually gifted massive loan books by Nama and some of the other banks that were not caught in the tentacles of Nama, but rather to some of the trade unions who have emerged from the woodwork in recent weeks and who are now making outrageous pay claims.

I allude to the fact that the Government may be to blame because, in the run-up to the election, it trumpeted the great job it has done in creating the fastest- growing economy in the EU.

Indeed, one need only look back at the words of the Taoiseach at the World Economic Forum in Davos in January to see just how arrogant the government had become in the run-up to the election.

The economy has been doing well over the past 18 months, but not that well. The Government never really admitted to the fact that external factors were hugely instrumental in pulling the economy out of the morass and, more importantly, that there are still massive and very expensive problems to work through.

Housing, health, law and order, infrastructure, regional growth, and dangerous levels of sovereign debt all come to mind. Not surprisingly, elements of the trade union movement have jumped on the growth bandwagon and want to get a slice of the action.

Expectations should have been, and more importantly now need to be, managed carefully. There are many threats lurking in the undergrowth.

The National Bus and Rail Workers’ Union has lodged a pay deal of up to 25%, which was inspired by the deal the Luas drivers are reported to be getting. The public who use these transport services will simply end up picking up the tag, as is always the case.

Do the unions care? Not in the least! Amazingly, councillors are now reportedly looking for a 40% pay hike. We can take it as given that many other unions will follow suit over the coming weeks and months.

The fear is that we are now threatening to go into the sort of wage spiral that was so instrumental in creating the situation in 2007 that resulted in the total implosion of the economy.

If one looks at what is currently happening globally, one could get deeply concerned about the risks posed to the Irish economy of reverting to the sins of the past.

I already alluded to the external factors that have been so instrumental to Ireland’s growth recovery over the past couple of years.

Some of those factors are already starting to move in the wrong direction for Ireland.

Sterling has lost nearly 10% of its value against the euro since late last year, largely due to justifiable concerns and market nervousness in relation to Brexit. In the UK budget last week, the Treasury revised its growth forecast for the UK economy in 2016 down to just 2%.

There are also more serious attempts being made to curb oil supply, and we have seen a modest rise in oil prices in recent weeks, and this is already being felt at the petrol and diesel pumps here.

All of these factors represent headwinds for the Irish economy, and if they persist or get stronger, the gloss could certainly be taken off Ireland’s growth.

There are, of course, also the ongoing attempts to solve the year-long EU migration crisis. A bold attempt is now being made to turn back migrants seeking to reach the Greek islands.

There are serious reservations about the legality and, indeed, ultimate effectiveness of these measures, but most worrying from a longer-term perspective, this crisis has more than anything else highlighted the difficulty of policy-making at EU level.

Can one imagine how much weaker the EU would become without the UK in its ranks?

We need to be careful about how we behave in the current economic upswing. That will determine how we will be forced to behave when — not if — the next economic shock hits us. It is unfortunate that, just when we need strong and stable government, we have anything but.