At the half-way point in Ireland’s onerous three-year bailout deal, the economy has come under the EU microscope and the signs are far from encouraging.
The blunt message underlying yesterdays overview of economic performance in the 27 EU members conducted by the European Commission, is that more austerity is the order of the day for Ireland and throughout Europe. With hopes of growth dwindling, it appears there is no escaping hairshirt policies.
According to the latest health check on the state of European economies, the bleak warning for Ireland is that it must “steadfastly” stick to the targets of the €85bn EU/IMF bailout programme. That, says the commission, is the best way to minimise the serious risks posed by adverse developments in the euro area where storm clouds are gathering over Italy and Spain, while Greece remains on the brink of disaster, and both Ireland and Portugal struggle to meet bailout targets.
It remains to be seen whether the bleak economic forecast will strengthen or undermine the growth policies championed by new French president François Hollande. Arguably, it could provide ammunition for the austerity philosophy espoused by German chancellor Angela Merkel.
What people will find worrying is that the slowdown among Ireland’s EU trading partners has put a major question mark over Government hopes that growth and recovery spearheaded by exports would stimulate the economy. Indeed, the commission’s warning that major challenges lie ahead is something of an understatement in view of its prediction that economic growth will slow to 0.5% this year from 0.7% in 2011, a diagnosis in line with last week’s OECD prediction of how events in the eurozone will impact on the Irish economy.
The only glimmer of good news, if it can be described as such, is an assurance that on top of the progress made so far, all the information currently available suggests Ireland is broadly on track to meet the demands of future quarterly reviews under the terms of the bailout programme.
Significantly, the 1,000-page report suggests a Europe-wide banking union to avoid cross-border fiscal disasters plus direct recapitalisation of troubled banks like those in the Spanish system which is now close to breaking point. Such a development could have telling implications for Ireland where the bank bailout constitutes a sovereign loan, effectively saddling taxpayers and the entire economy with an unsustainable burden.
The commission’s hairshirt prognosis will send shivers through tens of thousands of mortgage holders in arrears and families at the pin of their collars struggling to put food on the table. While the report found that reforms to improve competitiveness and create more jobs were significantly advanced and also that sheltered sectors of the economy were opening up, many pupils from the class of 2012 studying for the Leaving Certificate will face an uncertain future and the grim prospect of emigration.
Tragically, despite a string of announcements by the Government about foreign companies either expanding or setting up here, many young people will have no chance of finding a job at home when indigenous companies, particularly in the retail sector, are still going to the wall in droves. Sadly, for many of them, the disheartening prospect of having to go abroad to find work will not be a “lifestyle choice”.
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