Resolute Irish ‘between depression and acceptance’ in dealing with crisis

IRELAND is stuck between depression and acceptance in its reaction to dealing with the economic crisis.

This is according to a report from Goldman Sachs, who also found that Irish people differ to those in most other European countries, many of whom are stuck between the stages of denial and anger.

The findings are based on research by Swiss psychiatrist Elisabeth Kübler-Ross, who analysed the way countries have dealt with the financial downturn.

The report said that while Ireland’s progression from European out-performer to under-performer has been sudden, the government and the Irish public have been “quick to come to terms with the severity of the crisis”. The report also said the Irish public “have shown an impressive resolve in responding to the economic and budgetary crisis”.

Goldman Sachs economist Kevin Daly said: “Although the government, the opposition and the trade unions continue to debate where and how the knife should fall, there is little or no dispute about when and how much the budget should be cut.

“This contrasts with the situation in a number of other European countries where, despite similar budget problems, there appears to be a reluctance to acknowledge, let alone confront the problem.”

Goldman Sachs expects the budget deficit to be 12% of GDP this year, between 11.5 and 12% next year and then to fall sharply after that. It is “relatively optimistic” on the future of Ireland’s banking sector and believe NAMA represents a “speedy and effective way to clean up the banks’ balance sheets”.

It said the loss that the Irish people have had to contend with has been severe but that the latest information on the Irish economy is encouraging.

From a peak in the first quarter of 2007, real GDP has declined by 10.5% in Ireland, which is double the Euro-zone peak-to-trough decline of 5.1%. The government budget balance has moved from a surplus of 3% of GDP in 2006 to an estimated deficit of 12% this year.

The report points out that support for public sector pay cuts in Ireland is in marked contrast with the situation in countries such as Greece, Spain and Portugal.

Goldman Sachs expect Ireland’s growth to be -0.5% in 2010 and +2.9% in 2011.


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