Taoiseach helps launch report on economic recovery

Taoiseach Brian Cowen and around 200 business leaders were on hand for the publication of a report this morning on how the Irish economy can recover from the current crisis.

The report, entitled 'A Pathway to Recovery and Renewal for the Irish Economy', praised the Government for the action it has taken to date and outlines additional measures that need to be taken.

The FTI Consulting report centres around a number of key recommendations - resolving the banking crisis, rebuilding confidence and goodwill and addressing the public finances and regulatory concerns.

Resolving the banking crisis is critical to recovery of the economy, according to FTI.

The report looks at the creation of a system of evaluating, distinguishing and prioritising bank assets and recommends that Government policy should be designed to distinguish between assets worth retaining for a long-term resolution process and those assets whose social and economic value are maximized through a short-term maintenance and accelerated resolution process.

In addition, FTI has also recommended the establishment of a clearing house or public exchange for transfer of distressed assets.

FTI has also highlighted the need for more effective regulatory oversight of the banking sector and believes this is a key element of a recovery strategy.

Speaking at the launch of the report, its author, FTI senior managing director Ronald Greenspan said: "In some ways, Ireland finds itself economically trapped.

"The industry sectors which had helped fuel its record growth - real estate, financial services and export manufacturing – are the primary sources of its economic problems today.

"Further increases in government spending to stimulate the economy are impractical or unavailable due to the deterioration in the public finances, rising borrowing costs, and a perceived risk of default.

"However, the Government has taken strong action to date, and we believe additional action, if coordinated and communicated thoughtfully, can sow the seeds of genuine recovery."

“We understand and agree with government’s proposed approach of maintaining a distance from bank management and demanding the boards of the institutions retain responsibility for the resolution process. However, the unprecedented government financial stakes in these institutions also demand a new structure of oversight."

The report highlighted some of the intrinsic strengths of the Irish economy that can be used to achieve short term stability and long-term recovery.

It points out that Ireland is a gateway to Europe, has an educated and flexible labour market, had relatively low Government debt entering into this current phase and has a history of strong democratic institutions, social collaboration and public-private partnerships.

"We believe that Ireland has the intrinsic economic assets which, if managed properly, will enable short-term stabilisation and long-term economic recovery," said Greenspan.

"However, it cannot be over-stated that economic recovery is dependent on the stabilisation and reform of Ireland’s banking system, in terms of troubled asset resolution, recapitalisation and regulation, as well as the rapid re-building of confidence – through communications and engagement – within both domestic and international stakeholder communities, including consumers, corporations and investors.

"These priorities must be addressed as quickly and thoughtfully as possible, with a view toward producing the maximum impact in the immediate short-term."