Talk of recovery may be premature

Over the last months of 2013 and first few of this year, a degree of optimism has crept into the national psyche, as it finally seems we are emerging from the greatest economic depression in a generation.

Announcements of job creation seem to finally be outstripping job losses; the Government has talked, even if only fleetingly, about cutting the punitive taxes which placed a stranglehold on our spending power for much of the last five years — the sting in the tail is a suggestion that the tax reduction be in exchange for some form of private-sector pay freeze; houses have begun to sell, car sales are finally on the increase again and retailers — in parts of the country, at least — are beginning to see their tills ticking over.

Last Friday, the Economic and Social Research Institute used its latest quarterly economic commentary to reveal that, “after a long period of attrition, we are approaching the end of the very painful period of fiscal adjustment”. It said the unemployment rate should be down to an average of 10% of the labour force in 2015 — at the height of the recession it was hovering close to 15%. It predicted Government borrowing will come in slightly below target in 2014, at 4.5% of gross domestic product (GDP), with a further decline to 2.8% of GDP in 2015.