The sweet smell of success of the quiet recovery
People use to drop into Dundrum Town Centre to shelter from the rain, but now they're back to shop. Deirdre Reynolds reports on the quiet recovery that even the Financial Times has endorsed
Minister for Finance Michael Noonan described it as "the blackest day in Ireland since the Civil War broke out". Almost six years ago today, the government guaranteed Ireland's banks to the tune of €440 billion.
However, there was better economic news this week. Ahead of the sixth anniversary of the bank guarantee on Tuesday, Ireland's economy is now growing at its fastest rate in seven years, with GDP up 7.7pc on last year, according to the latest CSO figures.
Earlier this week, the Financial Times even urged other stagnating European nations such as France and Italy to learn from Ireland's "astonishing" comeback, and the country's "long-suffering people".
In an editorial in Monday's newspaper, it acknowledged that "few countries soared as high or crashed as hard", but said that a combination of "the toughest choices" for ordinary Irish people and the rebuilding of the banking sector had led to "astonishing" growth, "a pace unseen since the heady days of the early 2000s".
"Others should learn from its example," it added, "for small, open economies such as Ireland external conditions are far less important than steps taken at home".
"Overall, things are going in the right direction," agrees Ronan Lyons, Assistant Professor of Economics at Trinity College Dublin.
"When you look at consumer spending within GDP [gross domestic product], which is the figure that economists would look at, it's going roughly in the same direction.
"That's a good sign that people are becoming a little bit more confident about spending, and it doesn't seem to be credit-led, which would be the big concern."
As the latest autumn/winter fashions were unveiled at Dundrum Town Centre this week, shoppers certainly seemed buoyed by the latest quarterly national accounts.
"The last few years have been tough for everybody," says general manager, Don Nugent, "but we've definitely seen a lift over the last number of months.
"Although this kind of [good] weather doesn't help, already we've seen our footfall increase on last year, and those who do come to the centre are here to shop rather than shelter from the rain.
"Reports back from the tenants are quite positive as well," he adds. "[Designer fashion brand] Michael Kors opened here in October last year, and told us they had their most successful launch in Europe in Dundrum.
"Our latest addition, TK Maxx, opened last Thursday and is already trading ahead of target."
Since opening up her own perfume boutique in Dublin's exclusive Westbury Mall last year, Marija Aslimoska admits that some days have been quieter than others, but is confident that 'Parfumarija' can enjoy the sweet smell of success.
"We opened at the beginning of October last year, and had a really busy Christmas," perfumer Marija says, "then in January, reality kicked in a bit.
"Towards the end of June, things suddenly picked up again, and it's been sustained.
"A year ago, a lot of people were buying for special occasions or birthdays only," she explains. "Now they come in and say they want to treat themselves to a new bottle of perfume.
"People are less apprehensive about spending - that has definitely helped."
"As a small business, we're still some way away from paying ourselves properly," jokes Marija, "but if we keep going on the curve we're going on, I'm really optimistic."
Situated in the heart of the IFSC, meanwhile, the capital's swankiest new hotel suggests that not everyone will be sitting in watching X Factor tonight either.
Formerly known as the Clarion IFSC, the four-star Spencer Hotel was snapped up by Patron Capital for €33 million last December, and underwent a €2 million make-over before reopening in June, complete with cocktail bar, pan-Asian restaurant and day spa.
"Nowadays you're competing with the living room," concedes hotelier Paul Fitzpatrick of Fitzpatrick Lifestyle Hotels, which operates the property, as well as The Morgan and The Beacon in Dublin. "You have to give them a reason to come out.
"Since relaunching in June, we've been growing month on month, week on week," he tells. "We're getting the after-work crowd on Thursdays and Fridays, as well as domestic tourism from people up from the country to see a show.
"People are cautious, and they're looking for value, but they're spending again.
"Across the three hotels, we can see a lift in the industry. It's very encouraging."
Others are jetting to sunnier climes - or colder climes, as the case may be, with Topflight this week reporting a 25pc increase in bookings for this ski season compared to last year.
"Ski bookings are way ahead of last year," says Topflight's managing director, Tony Collins. "Cruise bookings are also up."
"In the past few years, people wanted to go on holiday, but would often forgo the luxury.
"Now they're looking for four-star hotels and sea-view rooms once more."
"Meanwhile, we've already had enquiries for destinations as far afield as the Dominican Republic and Thailand for 2016."
"During my 25 years in the business, I've seen plenty of ups and downs," he adds, "but things are definitely looking up right now."
Despite the better-than-expected growth figures, with Budget day just over two weeks away, Taoiseach Enda Kenny wasn't promising an end to austerity just yet: "We have a big job of work ahead of us.
"We intend to build and strengthen the economy for the future.
"So what people can expect is that the decisions that the Government will make here will be to strengthen and fortify the progress that we have made in the past period and not to waste it."
Even the Financial Times' gushing editorial confessed that Ireland is "not yet out of the woods", with "dangerous levels" of both public and private debt, not to mention an unstable housing market, and warned that "early glimmers of optimism" should not be mistaken for a return to the "carefree days of easy growth".
Six years of austerity has already made consumers here more circumspect, reckons Dundrum Town Centre boss Don Nugent: "Consumers are not necessarily looking for cheap things, but they are looking for value.
"Brand loyalty is no longer a major factor in consumers' minds, with 82pc of our shoppers now comparison shopping, both within Dundrum and with [other shopping destinations like] Grafton Street.
"From a shopping perspective, that behaviour is here to stay, and I think that's a good thing."
"To be honest, I think people have learned their lesson from the last 10 years," says economist Ronan Lyons. "I don't think many people are expecting a return to 10pc growth like what we had 10 or 12 years ago.
"One thing I would point out is that often the type of percentage change [to economic growth] we're talking about is very small.
"It's only when it happens year after year, and you've got years of growth, then you'll notice it."
"In any event, the rules haven't changed," he adds. "Consumers should still ask themselves how much they've got coming into their household each month, how much is going out and what their buffer is if something goes wrong before making any major purchases."
Reasons to be cheerful
1 Ireland's standardised unemployment rate continued to fall to 11.2pc in August (compared to 13pc a year ago) - its lowest level in five years, representing 36,955 less people on the dole than 12 months ago; and it's forecast to below 10pc in 2015.
2 As recovery continues to take hold, wages are set to rise, according to specialist bank Investec, whose latest assessment of the economy claims that total wage packets will be pushed up on average 0.5pc this year, and 1pc in 2015.
3 Although the Dublin housing market is still dangerously imbalanced, the burden of negative equity, at least, has been somewhat eased, according to the ESRI. The number of negative equity mortgages is expected to fall from 314,000 in 2012 to 179,000 by the end of the year.
4 Consumer spending on the high street surged by over 6pc during the first half of 2014. This is the fastest rate for seven years, according to the latest CSO figures. Meanwhile, digital research and marketing agency, Wolfgang Digital, found that online spending here has also jumped by 51pc in the last year.
5 Confidence is high, with the KBC Bank Ireland/ESRI Consumer Sentiment Index reaching a seven-year high in July, and 86pc of Irish CEOs feeling positive about the outlook for Ireland's economy, compared to just 31pc last year, PwC's 2014 CEO Pulse Survey found.
6 Even Patrick Honohan, governor of the Central Bank of Ireland, sounded cautiously optimistic earlier this year when he said: "The recovery in economic activity is showing a somewhat stronger trend overall than previously signalled".