Last week the Government published its much vaunted spring statement which was met with cynicism and scepticism. While its contents are a legitimate subject of debate, I was more interested by what the statement was juxtaposed with — Greek drama.
While Ireland gets on with a political narrative, centred on how best we can manage a recovering economy, the Greeks are at risk of investing in ‘Keystone Kops economics’, which is defined by open-necked shirts, proximate visits to Moscow and Berlin, alongside utterly chaotic domestic policy decisions that affect the daily lives of millions. Those who care about the future of the Irish economy need to stay focused on comparing and contrasting what is unfolding across both economies. The reason that this analysis is vital relates to the continuing opinion, in certain sections of Irish society, that the main political party in Greece — Alexis Tsipras’s Syriza — has something to offer Ireland.
As Greece undergoes a series of catatonic events around its mind-numbing debts, hard actions on the ground are taking place. The latest wheeze is a decision to grab cash from local councils to pay short-term salaries. Imagine that in an Irish context: The Government snatches a large amount of cash residing in the accounts of Cork City Council to pay teachers next month — can you envisage the turmoil that would trigger among the glitterati and supposed opinion formers that come out of their caves when a quick headline is available.
The spring statement, in contrast, is a remarkable product against the backdrop of what has been happening here over the past eight years. I remember articles about whether we could pay nurses and teachers around the time of the troika intervention. Then, there was a lot of guffawing about how real that risk was. In fact with a mountain of debt and current expenditure far exceeding revenues, our providers of credit — the much demonised bondholders — were close to shutting Ireland off from access to credit. Even if they were open to loaning us money the cost of that was fast approaching prohibitive levels.
Instead we now have record low levels of interest rates attached to our bonds. You can argue correctly that the ECB is central to that, but remember, Greece is also within the economic zone run by ECB policies. However, its bond yields have bounced over 10% compared to us at around 1%. On top of that, Greek exchequer maths are wrecked. Ireland is doing better, albeit with plenty more to do.
The spring statement does more than reflect the current economy. It also lays out a map of how the economy could evolve over the next number of years. This is a useful tool for all politicians and voters in Ireland to examine because it provides the data upon which we can all have a grown up conversation.
That conversation should revolve around how a small open economy such as ours should be run to balance the needs of services which support a modern civil society while creating the environment in which progressive wealth creation can prosper. It must also keep an eye on making Ireland an attractive investment, not just to private companies who want to establish here but also the global pension funds and insurance companies that provide capital to governments through regular bond auctions.
On both fronts, Ireland is attractive to multinational companies who continue to announce substantial investments here. It has also won favour with bond investors, as evidenced by recent issuance with record low yields. It would be easy and naive to take these two sources of investment in Ireland for granted. Neither are much evident in Greece and there are profoundly good reasons for that which we cannot ignore as 2016 looms.
Joe Gill is director of corporate broking with Goodbody Stockbrokers, His views are personal.
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