Thursday 19 October 2017

Richard Curran: Kenny must strike right balance

Richard Curran
Richard Curran
Richard Curran

Richard Curran

You wouldn't have to be Nostradamus to predict what Taoiseach Enda Kenny will tell us all on television tonight. In an attempt to ensure the Government gets maximum kudos possible for steering the country through the "Fianna Fail bailout travesty", Kenny will thank the Irish people for their efforts during this difficult period.

Kenny will say it as a national achievement borne by the Irish people, while also hoping to consolidate the political gains from it.

The Taoiseach will be right about the achievement, Irish people deserve an enormous pat on the back for absorbing the pain. The Government also deserves credit for taking some very tough decisions.

But the tricky bit of the Kenny national address will be striking the right tone about the future. If he suggests we have come through the crisis, he could be wrong, especially when we may have to absorb a further €2.5bn budget adjustment 10 months from now.

If he emphasises the return of sovereignty the bailout bestows, he will leave the Government open to taking all of the blame for further difficult cuts that lie ahead.

If he plays too heavily on how we still need to keep a tight rein on spending and that a lot of work has still to be done, it will sound completely miserable -- austerity is here to stay, and the Troika period hasn't really ended.

How does he take credit without gloating; warn of future risks without sounding too downbeat; strike a very positive note without being a hostage to fortune? No doubt the speech writers will seek to strike a balance between each of these extremes, but in doing so, the overall message could be utterly confusing.

The truth is actually quite simple. Here are three reasons to be cheerful about the end of the bailout and three reasons to be worried.

Cheerful

1. The Government is back in the driving seat: Fine Gael and Labour will have greater freedom to make their own decisions about economic policy, how they raise money and spend it. It is a return to the somewhat limited economic sovereignty eurozone countries can enjoy.

2. The worst is probably over: The major budgetary adjustments that were required have been done and even if there are more to come, the heavy lifting has passed.

3. The economy is recovering and set to grow: Economic growth is back. Jobs are being created again and we will see the benefits of the path we have chosen.

Worried

1. The Government is back in the driving seat: The Coalition no longer enjoys the political cover of the Troika for further tough decisions that will inevitably have to be made. Equally, they are already talking about tax cuts. Will the Coalition last if its parties don't share a common view of where we go from here?

2. Assuming the worst is over? With a debt/GDP ratio of 123pc; massive mortgage arrears and personal debt; an unreformed public sector; and a eurozone crisis that has been stemmed but not solved, perhaps the hard work is only beginning.

3. The economy is not growing fast enough: The Government needs a pick-up in the Irish economy above what many forecasters are predicting. This will be necessary to help generate Exchequer revenues to fund the interest bill on our debt, perhaps top up one or maybe two of the state banks with more capital, and avoid further austerity budgets. Eurozone growth rates are sluggish and look like staying that way.

Irish Independent

Also in Business