Monday 26 September 2016

Donal O'Donovan: Looks as if we're going to need a 'bigger bucket'

Published 11/09/2015 | 02:30

Spending: Former Finance Minister Charlie McCreevy
Spending: Former Finance Minister Charlie McCreevy

His bucket doesn't runneth over quite yet, but less than two years since the end of the bailout Michael Noonan faces the unexpected difficulty of managing rapid growth.

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Figures released yesterday confirm that the Irish economy is powering ahead of our European neighbours. Growth of 6pc this year is a pace economists would more expect to see in China and other so-called emerging market economies.

The unexpectedly robust recovery here is putting thousands of us back to work, but the current out-performance undoubtedly carries uncomfortable reminders of 10 years ago.

Back then, Ireland was also the poster child for eurozone growth - until it all came tumbling down.

Given the subsequent misery, people are right to be wary. We are not in that kind of danger zone yet, is essentially what Mr Noonan said yesterday. The Limerick man had, as ever, a handy analogy to explain.

Asked whether the economy is once again in danger of "overheating", Mr Noonan demurred.

"There is a kind of traditional view that the economy is a kind of bucket being filled up with water, and once it is full it can't go any further, it spills over.

"Which is kind of overheating in the economy. But you see, what you do is you create a bigger bucket …" he explained.

That homespun wisdom had echoes of predecessor Charlie McCreevy's line about Budgets: "When I have it, I spend it."

But, in his defence, Mr Noonan isn't about to go on a spending spree - something that will disappoint many as Budget day approaches.

Next year's Budget will be up to €1.5bn more than the current spending package, as has long been flagged.

The bucket is also still some way from being full. Unemployment of 9.5pc means there could be plenty of growth here, before we run out of workers - something that would drive up wages and damage competitiveness.

Even at that, returned emigrants would broaden out the pool - or in Noonan's terms, form a bigger bucket.

Better childcare could support stay-at-home parents' return to the workforce too, a bigger bucket again. That's the minister's theory.

For all our sakes, let's just hope that there isn't a hole in the bucket.

Irish Independent

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