‘No’ vote on fiscal compact would be ‘economic and financial suicide’

A ‘No’ vote on the fiscal compact treaty would be economic and financial suicide for Ireland, according to Friends First chief economist Jim Power.

He predicts that interest rates will stay the same or even reduce over the course of this year, based on his assessment of current UK, US and European Central Bank policies.

The guest speaker at a briefing hosted by Fitzgerald & Partners accountants in the Blue Haven Hotel, Kinsale, Mr Power said leaving the eurozone is also not an option for Ireland.

Mr Power said eurozone trading will not improve until debt levels reduce and lending confidence increases. Similarly, in order for Ireland’s economy to improve, banks need to return to normal lending conditions.

He recalled how the troika’s intervention came at a time when it was not possible for Ireland to borrow at any interest rate. It stepped in with a loan to allow Ireland continue operating.

He also reviewed some facts from the recent fiscal changes in Ireland. Between 2007 and 2010, the GDP declined by 12.7%. In monetary terms, for every €1 in the economy in 2007, this was reduced to 76c by the end of 2010.

Some €20.8bn was taken out of the economy between 2008 and 2011 by way of tax increases and spending cuts, with another €12.4bn planned by 2015.

To help revive business activity, Mr Power suggested revisiting local authority rates to ease pressure on struggling businesses. The Institute of Certified Public Accountants in Ireland, the event hosts, is calling for an integrated entrepreneurship strategy to support job creation.

Mr Power also congratulated Cormac Fitzgerald of Blue Haven Food Company on winning the food and drinks category at the Small Firms Association’s National Small Business Awards 2012.


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