It’s time to feel the pain and adjust to our much reduced circumstances

AS a new year unfolds, the next phase of the recession will be more brutal. At every level, be it household, business or nationally, we have been busily adjusting our expenditure in line with reduced incomes and revenue. As the situation deteriorated, we kept our focus on survival. Each situation eventually stabilises.

The new normality will then have to be confronted. For most people, the worst aspect will be resolving residual debts. More than anything else, 2010 will be about dealing with debt.

Total private sector debt peaked at more than €400bn. This includes property credit (residential and commercial) here and abroad. Current values of assets are less than debts. This negative equity can only be sustained if individuals are prepared to put good money after bad. Businesses and investment funds that have been on the acquisition trail are worst exposed.