Ireland's economy still has a very healthy pulse
The financial engineering required to restore the Irish economy can be implemented -- now the Government must facilitate the growth and development of business, says London-based business analyst Oliver O'Connor in this article, which is reproduced from yesterday's 'Wall Street Journal'
Published 09/11/2010 | 05:00
Some recent headlines and commentary seem to suggest that the Irish economy has all but collapsed. It hasn't, and it doesn't have to.
Ireland has had a property bubble and crash, a regulatory failure, a banking disaster and a fiscal crisis. Now, Ireland is caught up in the great macroeconomic issues of our times: how deep and how fast to cut debt; what will promote sustainable growth; the governance of the euro and its monetary policy; how to fix banks and who should pay; and bond investors' attitudes to sovereign risk. It's an uncomfortable place for a small country to be in.
Ireland's macro and fiscal challenges are real, well-known, and openly disclosed. The recurrent government deficit has to be cut to 3pc of GDP from nearly 12pc in just four budgets. A credible four-year plan has to be published this month, and by December 7, the Government must produce a 2011 budget with €6bn in savings. The brunt is to be borne by spending cuts. By early next year, Ireland will have to return to debt markets.