Almost everyone has taken a financial beating during the last five years, with notable exceptions among the super-rich. That will continue, as the Government continues to balance the books. The Troika’s power may be reduced, but if the Government is back on the markets it will have to be disciplined in its budgets to borrow at an acceptable rate.
There is also the tricky issue of the commitment made to Europe to reduce our annual deficit to below 3% of GDP. That means further reductions in the still-too-high annual budget deficit (not to mention the overall debt-to-GDP-ratio, which is also considered way too large).
We know that home-owners will pay double the property tax this year that they did last and they will find out what their water bill charge for 2015 will be. That will not improve the national mood, to say the least.
The challenge for the Government, in its end-of-year budget, will be to not add any more taxes on top of that, but, despite all sorts of promises, that’ll be easier said than done.
The alternative will be spending cuts, but those working in the public sector are unlikely to tolerate any more reduction in their incomes.
Social welfare payments may be threatened again and further cuts in education and health spending will also be considered. Just how the economy is expected to grow in such circumstances is moot — and growth is required if the Government is to meet its debt-reduction targets — but, somehow, morale in the country, for some at least, despite the beatings, seems to be improving.
A rising tide does not necessarily lift all boats. If there are green shoots, they are evident in urban and not rural areas, and more so in Dublin than in any other city. The jobs are being created largely in the capital and the depopulation of rural areas continues, worryingly. There is also an age divide in the distribution of new jobs. Younger people, sometimes better-educated if not necessarily with the relevant experience, are more likely to get the jobs, because fewer commitments and debts mean they will accept less pay. Any recovery may mean better pay for those employed in the private sector, but not in the public sector.
Falling house prices tend to tell a more accurate story than rising ones. It seems bizarre to have rising prices when the Government is demolishing so-called ghost estates and so many other houses remain unfinished or vacant.
But the old adage of ‘location’ being the most important determinant of property value seems apt. A 13% increase in Dublin house prices in the 12 months to the end of November is seemingly caused by lack of supply in more prosperous areas of the city, something that will not abate.
The 5.6% nationwide increase is less easily explained. It’s said that ‘cash buyers’ are driving the market, but who has such money left after the bust of recent years?
The banks are the elephant in the room of the Irish economy. The transfer of developer property loans to NAMA did not leave them in a healthy state, as intended. They still continue to make losses on remaining loans, particularly to individuals who took out mortgages during the boom. They now have a shortage of money to lend, no matter what they say, and are transfixed by fear over making more mistakes in their lending, despite denials of excessive caution. There is a real fear that they will need even more capital in the future, creating another crisis as to who will provide the billions required.
What would help, or even transform, this economy is a refund of some of the money our government spent in rescuing AIB, Bank of Ireland and Permanent TSB — more than €30bn. The ethical and moral arguments — that by rescuing these banks and paying the bondholders at the failed Irish Nationwide and Anglo Irish Bank, we saved the euro from the meltdown that would have flowed from a collapse of our banks — are in danger of being ignored. That is the fault of the Germans. They are the biggest block to an EU deal to give us some refund.
They have been arrogant in their dismissal of the idea, despite concessions and commitments by other nations at an EU summit in June 2012, adopting an attitude that we brought things upon ourselves and can pay for it. They might do well to realise that their own economic power is the result of generosity by others during the 20th century, even as recently as the 1990 reunification of their country, which was supported by the rest of the EU, including Ireland.
President Michael D Higgins will make a State visit to the United Kingdom this year, celebrating the friendship between our two nations. Some Irish people define themselves by their anti-Britishness. Others, who think of themselves as too sophisticated to express that, prefer to emphasise our relationship with the EU. It’s handy for selling things, but, other than that, where has it got us?
The British stepped in with loans when we went bust in 2010 — admittedly out of self-interest, given the level of investment in this country — but there is far more that unites us than divides us, especially our common language. Europe thinks it helped us — and its big-wigs apparently think that we’re ungrateful — but do the sums and that help came at an extortionate price.
7. The European Parliament elections of 2014 are pretty close to irrelevant, relative to the amount of attention they’ll get
Hours of broadcast time and acres of newsprint will be devoted to a campaign that is little more than an X-factor competition for second-tier politicians. The election is to provide 11 members to a parliament that has power over our lives, but is still remote and of little interest to most. Do we care? Should we?
And, at the risk of going all Russell Brand on it, how much attention should be paid to the local government elections, the equivalent of bald men fighting over combs?