Richard Curran: European Commission warnings are important reminders but will Government listen?
“Forgotten but not gone” was an old refrain people used to say about others they didn’t like. Well the troika may well fit into that category as the European Commission publishes its latest review of the Irish economy.
The troika is still keeping its eye on Ireland because we still owe them money we borrowed during the bailout programme.
These twice yearly reviews highlighting where the EU Commission thinks we are going right and where we are going wrong, will keep on coming until 75pc of that money is paid back.
The big risks highlighted in the report include, long term unemployment, high levels of private and public debt, skill shortages and remaining questions about the banking sector.
The other big stand-alone issue is whether the new financing structure for Irish Water will be passed by Eurostat, enabling Ireland to keep its multi-billion euro water investment programme off the state’s national exchequer books.
Some of these issues can be tackled by the government.
Long term unemployment is being tackled but obviously the EU Commission would like to see more being done.
High levels of debt are a fact of life in post-crash Ireland, but I suspect the EU would like to see more by way of debt restructuring and possible write-offs of private debt. It certainly won’t allow any write-off of public sovereign debt, for Ireland or for Greece.
Questions around the banking sector, focus less on its future stability but more on its lack of competition and the implications for SMEs in particular. Again this is something the government could examine, as the biggest shareholder in Irish banking.
However, the more it tackles the banks and encourages greater competition, the less its shareholdings in the banks will be worth. Not a situation that sits comfortably with government as it prepares to start selling off AIB.
Thankfully the EU Commission can give us a different perspective on the economy and its risks, which enables us to see beyond government spin.
However, this report is likely to be forgotten about or simply ignored by government. The troika is lurking around but doesn’t really have much power. As long as the international markets like the look of what Ireland is doing, these concerns will probably be ignored – just like the voice of the Irish Fiscal Advisory Council was at budget time.
There is an election coming!