It’s a long time since the Irish economy was in the sweet spot

We are rarely aware of the high-water marks in life until after the water recedes.

It’s a long time since the Irish economy was in the sweet spot

Only with hindsight can we reach into the past and pick out a moment or a day where everything came together perfectly.

That moment, I fear, has passed for the Irish economy; let’s have a go at finding it. How does July 20, 2015 strike you? It was a quiet enough news day. The Greek banks had reopened after three days of financial waterboarding by the ECB.

Cuba and Washington restored diplomatic relations. But nobody blinked an eyelid at sterling.

At one point that day, 69 pence would have bought you a euro. Mario Draghi’s policies at the ECB had insured record low interest rates. Our two main trading partners were growing, albeit sluggishly, and their consumers were snapping up our competitively priced products.

Brexit was little more than the fevered dream of madmen and Donald Trump was nothing more than a comical TV businessman with prodigious hair. God was in his heaven.

Looking back, this was the sweet spot; a happy coincidence — a confluence of outside factors that helped buoy an economy in desperate need. But just take a look at those external factors now.

Sterling has been obliterated and the Brexiteers have taken control of the British government.

The British cabinet ploughs on with its talk of a hard Brexit, including stuff about compiling lists of foreign workers. They are, needless to say, oblivious to any concerns about what a hard Brexit might do to Ireland.

Irish farmers and exporters have been their collateral damage. There is many a kite being flown — like last week’s suggestion that British immigration controls start at Irish ports.

Separate forces within US society, the steel-worker protectionists and the tax-justice millennials have only emerged. American economic policy towards Ireland may be shifting beneath our feet.

While we are losing friends in Britain and potentially in Washington, we look to the capitals of Europe to find them cold and indifferent.

Donald Tusk, EU Council president, plays hardball with the British, while others bang on about tax harmonisation.

Some elements of that happy coincidence that brought the Irish economy back from the edge still remain in play.

The ECB is likely to keep interest rates near rock bottom for several years. The US economy appears to be in reasonable enough shape.

The British economy will now grow more slowly which will inevitably affect the economy here too.

Our European partners seem to neither understand our concerns about a hard border. Tax harmonisation is rearing its head again.

This all begs the question: What are we doing about it?

A short-termist budget that spoke about “Brexit-proofing” but offered very little of the sort, is unlikely to fix things.

An opportunity to send out a strong signal of reassurance to indigenous exporters and retailers appears to have been lost.

July 2015 seems a long time away.

  • Paul Colgan is economics editor with Ireland Live News on UTV Ireland.

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