Ireland’s export led recovery will work – Olli Rehn
IRELAND’S export led recovery will succeed but the situation in Europe is "very dangerous," according to Olli Rehn, the EU economic commissioner.
He likened Ireland’s situation to that of his home country Finland as well as Sweden - both countries experienced deep financial and economic crises in the early 1990s.
“For Finland some of the numbers were even uglier than those for Ireland,” he told the Irish Banking Federation in a speech via video link from Brussels.
“In particular, unemployment increased in three years from less than 4pc to 17pc,” while our rate is currently just above 14pc.
“Both of these countries put the banking sectors on a sound basis by very unpopular bank support measures and in the case of Finland brutal restructuring: half of the 50 000 jobs in the banking sector disappeared.
“Both consolidated public finances strongly.”
Although he added that one of the options used was currency devaluation, something we do not have the ability to do.
He is convinced an export-led recovery is underway.
“Exports are increasing robustly and the current is turning.
“As a result, Gross Domestic Product (output) increased by 2.3pc in the second quarter,” he said.
He added that a prerequisite for the resumption of growth and job creation is that financial market calm down.
And he admitted that European measures to tackle the debt crisis have “not been able to put down the stubborn financial market bush fires centring on the sovereign market.”
He said: “If we don’t get an upper hand of this turbulence soon, the standstill we are experiencing will turn into a new recession.
“No part of Europe would be saved from the consequences, including, of course, Ireland, which so much depends on the growth of its export markets for its recovery.”