Social divide - Poverty at the heart of our economy

CONTRASTING faces of Ireland’s economic success are outlined today in reports showing that while the economy is heading for a soft landing, the gulf between rich and poor is growing at an alarming pace.

Prophets of doom and gloom, who tend to predict a crash landing for the Irish economy, are wide of the mark judging by the latest quarterly bulletin from the Central Bank.

While the bank concedes economic growth will slow down over the next 18 months to 4% in 2008, it goes on to point out that despite its modest growth rate, Ireland’s economic expansion over that period will still be strong by international standards.

Taking an equally dispassionate view of the situation, Irish Examiner columnist and Friends First economist Jim Power warns that economic growth is heading for its lowest level in 15 years.

As a result, he predicts the “first couple of years of the life of the new multi-coloured Government will be more challenging than anything seen over the past decade”.

With the slowdown in the property market putting pressure on tax revenues and employment levels, he suggests growth will ease back from 5.7% in 2006 towards 4.8% in 2007, to 3.8% in 2008.

Similarly, while predicting 35,000 job losses in the construction sector over the next 18 months, Davy Stockbrokers also forecast that economic growth will remain strong. According to its report, the economy will grow by 4.5% this year and 3% in 2008.

Significantly, however, Jim Power also warns that consumers are facing into a new phase of food price inflation. Predicting the cost of basic items in the shopping basket is about to change dramatically, he says the price of wheat and other commodities like sugar, corn and maize will go through the roof as land is increasingly used to produce alternative energy crops in the US and elsewhere.

Inevitably, this will hit the poorest sector of Irish society where, according to the Central Statistics Office, 10% of people are living on €157 a week. In stark contrast, the CSO survey shows that Ireland’s richest 10% have a minimum of €2,233 a week to live on.

After spending €1,659 a week, the top earners are left with €573 to spare. Going on the Micawber principle of economics that spells happiness.

However, those at the bottom of the pile spend €217.19 a week, leaving them €59.49 in debt. And by the same principle, that spells misery.

However, the blunt reality is that families are living beyond their means because of the paucity of their income.

The unacceptable result of this bleak scenario is that tens of thousands of Irish children remain mired in poverty.

Despite the inexorable onset of an economic slow-down, Ireland is still likely to outstrip Britain and other countries using the euro.

Yet, it is painfully clear from the CSO figures that persistent poverty is a depressing fact of life at the heart of one of the richest economies in Europe.