Sunday 19 November 2017

Bond investor says Ireland will continue its policy of austerity

Mohamed El-Erian: State will stick with austerity
Mohamed El-Erian: State will stick with austerity
Colm Kelpie

Colm Kelpie

One of the world's most influential bond investors has predicted that Ireland will stick with austerity.

Mohamed El-Erian, chief executive and co-chief investment officer of global investment giant Pimco said the country was remarkably hesitant to change course.

And the US-based investor, who is visiting Ireland, said most of the people he had spoken to said there had been no alternative but to go down the path of cutting spending and hiking taxes.

"While they appreciate the urgent need for growth and jobs, they believe that this can be achieved only after Ireland's finances are put back on a sound footing," he wrote in the website 'Project Syndicate'.

"They also argue that, given the banks' irresponsibility, there is no quick way to promote sustained expansion. They are still angry at bankers, but have yet to gain proper retribution."

Mr El-Erian said the accumulation of wealth during the Celtic Tiger years had been an effective shock absorber.

"This, together with fears about being left out in the geopolitical cold . . . dampens Irish enthusiasm for economic experiments outside the eurozone," he said.

"Indeed, Irish society seems remarkably hesitant to change course. Right or wrong, Ireland will stick with austerity. Efforts to regain national control of the country's destiny, the Irish seem to believe, must take time."

Recounting Ireland's slide from boom to bust, Mr El-Erian accused the Government of transforming a banking problem into a "national tragedy".

Irish Independent

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