Growth offers chance ‘to heal scars’

The Organisation for Economic and Cooperation Development regularly produces country-specific reports on its members and lists policy prescriptions and best-in-class score cards.

The report on Ireland by the Paris think tank two years ago was overshadowed by the country’s bid to regain access to international debt markets.

The country was by then also suffering something from report fatigue.

The OECD’s latest report presented yesterday by its secretary general Angel Gurria, with Finance Minister Michael Noonan, was therefore less important for its commentary on the economy.

Its forecasts anyway are likely to have been overtaken by recent figures confirming GDP surged in the first half of the year.

Indeed, the report says rapid growth means the country faces “propitious circumstances” and the chance, as Mr Gurria put it “to heal the scars” from the financial crisis.

The report focuses on the new opportunities, as well as recommending well-trodden paths for dealing with the legacies of large government and household debt.

But there is no escaping the fact Mr Gurria is presenting the report as the Government prepares to deliver its last budget next month before facing a general election in the coming months.

There is something for coalition parties to hail (favourable comments on the economic outlook and the tax system) and for opposition parties to seize upon (still high levels of long-term unemployment and low public investment in housing.)

Overall, the report will give Mr Noonan comfort.

The minister may even likely cite the report to support potential budget measures, including providing incentives to skilled workers from abroad and helping Irish emigrants return home and for incentives for SMEs.

Mr Gurria was also not particularly worried about Mr Noonan’s plans for an expansionary budget of up to €1.5bn in tax cuts and spending increases next month.

The OECD has always been a big fan of property taxes and also favours citizens paying for services such as water services.

The report, though, wants the Government to keep the link between house prices and the level of property taxes.

Mr Gurria said the performance of the economy was impressive, with Ireland attracting new waves of investments from abroad.

But in contrast productivity of indigenous SMEs continues to deteriorate as larger firms are better placed to exploit revamped activation programmes to help the long-term unemployed.

With the highest childcare costs in the OECD, low income families need more support.

Overall, there was little in the report to upset Mr Noonan’s budget preparations.


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