Recovery will take another five years, says McCarthy
THE economy won't recover for at least four or five years, economist Colm McCarthy said in the course of a scathing attack on Irish society, which also saw the author of the Bord Snip Nua report lacerate lobby groups, the Seanad and the country's bankers who cling to their jobs despite their mistakes.
"We've had two macro-economic cock-ups in a generation," said the economist, who is currently advising the Government on selling off semi-state bodies and who has written reports in the past detailing possible spending cuts for two different governments.
Ireland is probably now in an even worse position that it was during the last recession in the 1980s because the banking sector has collapsed this time around, while a currency devaluation made the economy competitive and a pick-up in global demand in the early 1990s created an appetite for Irish exports, Mr McCarthy told the Cantillon Summer School in Tralee yesterday.
A further problem for the country today is the bond market's distrust of Ireland, he said. While interest rates were higher in the 1980s, Ireland had always been able to borrow relatively easily, he added.
"I've been watching these markets since I was a kid and I've never seen them as nervous as I've seen them in the last few years," he said.
The Government is now spending 14c out of every €1 collected in taxes on interest repayments compared to 4c during the boom.
"All we have managed to do to date with all the pain and suffering and whingeing and grief" is keep government spending more or less level, he said.
This will become increasingly difficult as the interest on repayments rises.
"That will keep going north for the next few years," the economist forecast as he pleaded for a comprehensive overhaul of the way the State was run.
Among the changes proposed were the abolition of the Seanad, a single tier of local government, a spring cleaning of quangos, portable pensions in the civil service to encourage the movement between the public and private sectors, more independent think-tanks and more debate in newspapers.
The economist added that he could not understand how bankers "remain in situ after they destroyed their companies" and called for the completion of a report into the banking crisis. "The public are entitled to a detailed narrative," he added.
The high number of bank employees still in senior positions "wouldn't happen in countries where they take their capitalism seriously -- like the US", he said.