Thursday 8 December 2016

Our economy is not fixed and if Europe goes belly up we are in real danger

Published 11/02/2016 | 02:30

Finance Minister Michael Noonan with Fine Gael candidates Anne Marie Dermody and Kate O'Connell Photo: Tony Gavin
Finance Minister Michael Noonan with Fine Gael candidates Anne Marie Dermody and Kate O'Connell Photo: Tony Gavin

Consider this scenario. A eurozone country that exited an international bailout a few years ago has an election. The result gives no clear mandate to any party or grouping to form a government. Weeks of discussions and jockeying take place. The president, whose role is largely ceremonial, becomes involved in trying to put an administration together. He is accused of being partisan.

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Finally, a coalition is cobbled together. But because it has disparate elements and a tiny parliamentary majority, it is weak and unstable. No sooner is it in power than a row breaks about with Brussels over its budget plans.

Then - from New York to Shanghai - international financial markets get the jitters. Suddenly, the country looks risky and investors rush for the exit. Government bond yields start to spike. Alarm bells begin to ring. Warning lights flash more urgently.

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