Nation might take 15 years to recover
Economy has shrunk by 'catastrophic' 22pc on peak, figures reveal
Published 30/01/2011 | 05:00
Ireland's economy has "fallen off a cliff" and could take more than 15 years to recover as new figures reveal it has shrunk by 22 per cent from its peak.
A loss of more than a fifth of the country's domestic trade, particularly in the retail sector, in such a short period of time has been branded a catastrophe by the opposition and by the Irish Small and Medium Enterprises Association (ISME).
The domestic economy, the day-to-day business of trading, has been decimated and to a far greater extent than previously thought.
According to official CSO quarterly National Accounts figures, since the peak of Ireland's economic wealth creation in the first quarter of 2007, Ireland's economy has reduced by a frightening 22 per cent.
From that peak period in early 2007, GNP figures (the domestic economy) had plummeted by just under 25 per cent in mid-2010, but rallied slightly in the second half of last year.
Given the penal rates of interest being levied against Ireland on its €85bn loan from the IMF/EU, there is a growing consensus that the country won't be able to meet the repayments that some commentators believe could be as high as €10bn a year in interest alone.
As a result of a collapse of all tax revenues since the peak of late 2006 and early 2007, the Irish Exchequer has also reached another worrying milestone -- posting 35 consecutive monthly Exchequer deficits since January 2008.
Mr Lenihan's 2009 Budget day comments that the worst is over were based on a reported minor return to growth, driven by multinational profits, but this was an error and in fact the pace of decline actually increased towards the end of 2009.
In recent days and weeks, Mr Lenihan has pointed to the growth of the export sector as a real positive sign for the Irish economy.
He also said that he stood over his comments that the worst was over because GDP (GNP plus multinational profits) is a far better indicator in terms of economic activity and jobs.
In total, the domestic economy fell by 11.3 per cent during 2009, the largest-single decrease in wealth ever recorded.
Labour's finance spokeswoman Joan Burton said that Ireland had "fallen off a cliff" and that behind these stark figures was a world of pain for regular Irish families.
Fine Gael senator Paschal Donohoe said the enduring legacy of the Government was the destruction of small businesses around the country.
"Our export industries are vital but we need a thriving domestic economy to get our country back to work," he said.
"The Government has done too little too late to realise that we need small and medium businesses to drive our economy back to recovery."
ISME said the majority of the pain was being felt by small businesses, which have been abandoned by the State.
To illustrate the true devastation of the recession on the private sector, 127 companies a week have ceased trading since Brian Cowen became Taoiseach in May 2008.