Sunday 23 July 2017

Ireland 'will rebound rapidly from economic woes'

Ireland will rebound "relatively rapidly" from its current economic woes, Europe's Commissioner for Economic and Monetary Affairs Olli Rehn predicted this afternoon.

"The Irish are smart, resilient and stubborn people: they will get over this challenge and the EU is supporting them in that", said Mr Rehn.

He was speaking a day after approval of an international €85bn bailout designed not only to buck up the Irish economy but also to revive the euro's reputation and stave off the further speculation involving weaker euro economies.

Mr Rehn, presenting his autumn economic forecast in Brussels, said the measures taken by the EU and the International Monetary Fund to prop up Ireland showed that "we will do whatever it takes to support financial stability in Europe. But, as always, restoring confidence takes time."

His country-by-country economic report, prepared before the bailout was in place, says Dublin's four-year recovery strategy "clearly sets out plans to consolidate the public finances" but warns: "The pace of recovery will also depend on the speed of correction of other imbalances accumulated in the past".

The report says Ireland faces "painful but necessary adjustment to facilitate gradual recovery" and forecasts an increase in national wealth (GDP) of 0.9pc next year, compared with a 0.2pc decrease this year.

In 2012, the report suggests, Ireland should see a 1.9pc rise in GDP, but the report cautions: "The forecast assumes progress in the domestic rebalancing of economic activity, from construction to more productive sectors, in the clean-up of household and corporate balance sheets as well as further regaining of competitiveness."

Mr Rehn commented: "Ireland has hit a very deep economic recession resulting from the financial crisis, which hit Ireland because of its credit boom and real estate bubble.

"But the economy will face up to serious challenges. Ireland has a flexible and open economy which is capable of rebounding relatively rapidly from this recession."

The Commissioner added: "It is encouraging for Ireland and for the whole of Europe that Ireland has such support (from the EU).

"The Irish are smart, resilient and stubborn people. They will get over this challenge and the EU supports them in that.

For the UK, today's report says recovery is gaining momentum, with growth in the second and third quarter of this year "well above trend".

But it adds: "However, although a return to recession seems improbable, the impact of fiscal consolidation (budget cuts), coupled with a fading of temporary factors which have contributed strongly in 2010, make it unlikely that growth will remain this high for very long".

GDP growth of 1.8pc this year should rise to 2.2pc next year and to 2.5pc in 2012, compared with an expected average EU GDP growth of 1.7pc next year and 2pc in 2012.

In general, said Mr Rehn, recovery is under way, but with "uneven" progress across the EU.

"The economic recovery has taken hold. I am encouraged by the prospect that employment is finally set to improve next year in Europe. Public deficits are starting to decline thanks to consolidation measures taken, and to the resumption of growth".

But he said a determined continuation of fiscal consolidation and the creation of growth-enhancing policies were now essential to set a sound basis for sustainable growth and jobs.

Appropriately quoting the lyric of Irish rock star Bob Geldof's Boomtown Rats, Mr Rehn said: "As an Irish poet put it, I don't like Mondays, but this Monday is an exception - it brings better news."

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