Economic prognosis - Weight of criticism is dispiriting

THE Financial Times yesterday added its t’uppence worth to the groundswell of opposition to the Government’s economic, banking and job-creation policies.

In a highly critical and unflinching commentary, the newspaper dispiritingly described the latest plan to try to confront the chaos caused by Anglo Irish as “another round of three-card monty”.

The piece makes for dismal reading and it cannot be avoided. It asserted: “Unhappily, what is emerging in Ireland is how staggering bank losses are. It is time to let them fall where they should: on unsecured creditors once shareholders are wiped out. But Irish leaders are prolonging the uncertainty in the hope that zombie banks will, Lazarus-like, come back to life.”

That suggestion would find considerable support across the country, especially when that opinion is offered as part of an analysis that suggests that “Dublin fears that cutting loose Anglo’s bondholders will kill demand for Irish sovereign debt. The opposite is true, as record-high sovereign spreads show... It is the open-ended exposure to private liabilities... that drives up sovereign yields. Dublin must get its priorities right.”

The piece might have been published too late to shape the agenda at Fianna Fáil’s two-day parliamentary party meeting in Galway, which opened yesterday, but it must have added to the growing unease about how long it is taking to create even a sense of stability and possibility, much less confidence, surrounding Government proposals to rebuild the economy. The FT is not the only authoritative voice to question the Government’s response to the calamity unfolding all around us. Last week, business leaders pointed to what they considered wishful-thinking flaws in current policy.

Seán O’Driscoll, the Glen Dimplex chief executive, told the Lemass International Forum that it had been a huge mistake to shift policy away from engineering and manufacturing to “smart economy” jobs. His views were endorsed by Intel vice president Jim O’Hara, Hewlett Packard vice president Lionel Alexander and Pfizer vice president Paul Duffy.

Speaking on Friday, Aer Lingus chief Christoph Mueller declared that “we need to create jobs in the lower wage levels. We cannot dream the dream of the Republic of Ireland becoming a corporate university. That’s not going to happen”.

A day earlier in Tralee, economist Colm McCarthy told the Richard Cantillon School that the only really viable way to re-employ the half-million or so people who once worked in construction, retail or hospitality was to create blue-collar employment.

Taken together, these criticisms, and their essentially conservative sources, amount to a rejection of Taoiseach Cowen’s economic strategy and its focus on well-paid, high-skilled employment. It’s clear that business leaders have tempered optimism with pragmatism.

So, once again we are left in a state of conflict and confusion. Especially as there is such a ring of truth to the criticisms but, as has become his habit, Mr Cowen will dismiss the arguments even though they seem to be little more than commonsense.

It is becoming clearer and clearer by the day that we need the most profound change before we can even begin to think about a recovery.


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