Central Bank report - Plan needed to sustain confidence

AFTER a week in which the National Institute for Regional and Spatial Analysis (NIRSA) reminded us of how our political system so spectacularly failed us all, of how difficult it is to be optimistic about a political class that was so very easily and catastrophically diverted from its own policies, any sliver of news that is not altogether dismal is to be embraced with enthusiasm.

That a Central Bank report warning that the eurozone recovery may ‘moderate somewhat’ in the second half of the year as governments cut spending to lower deficits might be considered good news is a fair indicator of how very bleak things have been. So, even the qualified optimism in the Central Bank’s quarterly report published yesterday, is welcome, if not quite uplifting.

The bank has raised – moderately – its forecasts for the economy, though it warns that the scourge of unemployment will not be confronted in any meaningful way until next year. It is of little consolation to a person to be told that they are living in an improving, or at least stable, economy if they can’t get a job.

The bank, in a sobering indication of how dependent we are on foreign direct investment says a strong performance by exporters, in particular multinational companies, has made up for continuing greyness in the domestic economy.

The continuous improvement needed in infrastructure, especially in communications, and standards in third-level education requires constant attention if this investment is to be protected, much less extended. We might like to believe that we’re building a smart economy but foreign investors will be far more pragmatic in their assessments.

What is even more challenging is the Central Bank’s suggestion that Government needs to be far more explicit about how it intends to reduce expenditure and raise income over the next four years. The logic is that we need to have a programme that, in the event of, say, the collapse of the Greek economy, would convince investors and the institutions that lend us €18.5 billion a year that Ireland remains a good bet.

In so many ways, and apart from unemployment, this is the greatest challenge facing us. It is difficult socially, politically, economically and culturally.

As a general election comes ever closer very few of our politicians and none of our political parties will have any appetite for identifying spending cuts and/or new taxes to be imposed over the next four years. None will want to offer themselves as the harbinger of even more misery. Yet the alternative is even less appealing.

If we are not prepared to do this we run the risk of being swept along in a collapse outside of our control.

It is time for Fianna Fáil, and those who would replace them, to show they have the mettle for this kind of discipline. It is time to show they can behave in a way diametrically opposed to the failures reported by NIRSA earlier this week.

God knows they owe it to us all.

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Saturday, October 1, 2022

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