Our vulnerability to global trends - Perhaps we need new economics

“LET’S keep the recovery going” was the general election slogan used by Fine Gael to emphasise the Government’s mastery of the economy and its competence in matters financial compared to administrations in other countries that had also suffered severely in the recession.

It quickly became a two-edged sword. On the one hand, it emphasised the fact that we had emerged from economic meltdown and that things were improving. Much was made of the fact that despite our growing national debt, we were enjoying a healthy surplus in international trade, particularly in the area of pharmaceuticals.

However, it became unstuck when it grew increasingly obvious that the recovery was not being experienced by everyone, particularly those on lower pay and people living in rural Ireland.

A further challenge has now emerged to FG’s overused catchcry that makes it even more suspect and the question to be asked now is whether the recovery is faltering or going nowhere.

New figures from the Central Statistics Office show a big drop in the trade surplus in February from January’s record-high level of €4.796bn.

The CSO said that seasonally adjusted goods exports fell by 7% to €8.758bn in February compared to January. At the same time, imports rose by 9% to €4.987bn which resulted in a 21% fall in the trade surplus in February.

Of course, a surplus is still a surplus and is far better than the alternative but what is most worrying is that our exports of medical and pharmaceutical products fell by 6% to €2.188bn in February compared to a year earlier. These products mostly represent the activities of multinational operations in Ireland.

According to Merrion economist Alan McQuaid, the country’s trade performance in 2015 benefitted from the weakening of the euro, particularly against sterling and the dollar.

However, the global economic situation has now reversed, with sterling weakening against the euro on fears that the people of the United Kingdom will choose to leave the EU.

Efforts to limit our economic vulnerability to global changes like this should exercise the leaders of both Fine Gael and Fianna Fáil as they continue to trade insults as well as ideas on the shape of the next government.

An opinion poll published in yesterday’s Sunday Times shows that FF is now ahead of FG for the first time in eight years. That should give Enda Kenny pause for thought.

However, Micheál Martin failed to get the support last week of a single independent TD in the Dáil vote for Taoiseach. That should give him pause for thought.

What should exercise both of them mostly, though, is finding a way to limit our vulnerability to such global chill winds.

Perhaps we need new economics as well as new politics. Encouraging, facilitating and assisting indigenous industry is the best way to help achieve this.