We will muddle on despite upheaval
Published 10/04/2011 | 05:00
Your guess is as good as mine, really. I see Colm McCarthy and others are now suggesting that we will be in no shape to go back to the bond markets when the current EU/IMF bailout ends. I think in the meantime we will continue to play along with Europe and do what we're told until ultimately some kind of broader European answer is found to our debt sustainability. We will not be allowed to default, as that would undermine the economic rule of law, but in a year or two they will find some pan-European fudge.
Hopefully our export sector will continue to thrive and foreign companies will continue to locate here, attracted by our low corporation tax, which will remain, and the fact that through falls in property prices and wage levels, we are a much more competitive place to do business. But there will obviously be a lag in this export economy feeding into the domestic economy. So we will have a multifaceted economy -- a successful export sector with a lagging domestic sector, all still being bled dry on some level by bank debt and the legacy of the so-called cheapest bank guarantee ever.
Irish society will become much more polarised, between those who have work and those who don't. Geographically, there will be pockets of prosperity and affluence and pockets of chaos and second and third-world-style shabbiness. Practically everyone of 40 or less will be in negative equity and that will continue to have terrible knock-on effects on the day-to-day consumer economy.