THE failure of the Government to articulate a clear strategy to revive the economy has damaged its international status, according to one of Ireland’s leading consultancy groups.
The decision by Standard & Poor’s to lower Ireland’s debt rating “underlies the credibility gap this country is confronted with”, said Joe Carr, managing partner of Mazars.
He said there needs to be immediate action to correct that view and to get the message out there that this economy can and will recover.
Mr Carr outlined a framework to manage the national economic recovery at a press conference in Dublin yesterday. The country has a national development plan, he said, and it urgently needs a national recovery plan.
The international loss of confidence in Ireland stems from our inability to put a clearly thought-out framework together, spread over several years, showing how Ireland aims to tackle the debt crisis and the structural issues facing the economy.
Experience shows that firms with a clear strategy delivered better earnings and growth. The same is true for a country and its economy, said Mr Carr.
“Engendering confidence within the international community by articulating a clear vision and plan for our recovery is essential,” he said. Several countries including Japan, the US and France, have bigger national debts, “yet Ireland is viewed as being more at risk of defaulting on its debts”.
The reason is our failure to articulate a strategy for recovery, Mr Carr said, adding that there must first be a detailed analysis followed by set targets.
The next vital step to pull the jigsaw together is to take “action” to get the required outcome, he said.
Included should be a gradual 1% hike in taxation per year over the next five years. Ireland will also have to cap total borrowings at 65% of GDP up to 2013 and then to get it back to 50% by 2015, he said.
It will be vital to focus state services to assist the economy to achieve recovery targets and to ensure that state agencies such as Enterprise Ireland incorporate the strategy into their own plans.
Calling for a comprehensive recovery programme, Mr Carr said it was vital to restore “confidence and orderly credit flows in the banking sector” by 1 January 2010 and to get basic confidence back in the market by June of next year.
Mr Carr said the problem is that we have veered “from irrational exuberance to irrational pessimism”.
If the Government gets its act together and spells out a clear strategy targeting niche markets such as food, ICT and other key sectors “then confidence will return”, he said. A good plan to deal with the challenges ahead “is vital”, he added.
“We need this transparent framework to convince the rest of the world that we know what we are doing and to obtain the support of the Irish people in buying into the difficult actions needed to achieve our goals,” he said.
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