| 12.2°C Dublin

Will 2010 see the end of the recession? The bulls say 'yes'

THE signals that came out about the state of our economy last week were as clear as the slush in the gutters of Dublin city.

On the one hand, Davy said our economy would come out of recession in the first six months of this year, Standard Life told us that consumer confidence was up for the first time in 21 months, and Sherry FitzGerald stated that Irish house prices were beginning to stabilise.

On the other hand, the shortfall in our public finances is about €12bn more than it was this time last year. At 426,700, the numbers signing on the dole this year is almost 50 per cent higher than last.

A global survey by Knight Frank found that Irish house prices suffered the eighth sharpest fall in the world in the year to September 2009. And accountants Kavanagh Fennell said that four firms a day went out of business last year -- and that this trend would continue well into 2010.

With the Irish recession now a year-and-a-half old, most of us are sick to the teeth of it. Could 2010 be the beginning of the end of the economic downturn?

The Sunday Independent asked some of the top business brains whether or not we could see an end to the recession this year.


Tony Keohane

Supermarket boss

THE Tesco boss is optimistic that Ireland can kiss goodbye to the recession in 2010.

"The indications are that we are entering a period of stabilisation and it appears that things are beginning to bottom out," says Keohane.

As long as consumer confidence improves and there is an environment that promotes business investment then Ireland's economy could recover by October, adds Keohane.

"Consumer confidence has taken a hammering over the past 18 months or so. It is beginning to improve, albeit from historically low levels. The challenge now is to accelerate this recovery which in turn will stimulate domestic demand. Business investment must also be facilitated through credit availability and an environment that supports investment. This will help in creating new jobs and many other opportunities for new and existing businesses."

Keohane believes that if the global economy picks up, Irish companies with a strong footing in export markets will be among the first to recover.

Dermot O'Connell

Multinational boss

THE general manager of Dell Ireland says there are already signs that the economy will start to grow in the second part of this year. "International companies and multinationals have definitely started to do a lot more business here," says O'Connell.

"Ireland is more competitive than it has been in a good few years, so there are opportunities for companies to reinvest in Ireland. The challenge (for international companies) a few years ago was that there were not enough employees to hire -- that's not the case anymore. It's looking a lot more promising going into 2010 than it was last year when international companies were starting to hold back and defer projects." However, O'Connell has not seen the same pickup among smaller indigenous companies. "Some of these smaller companies are very conscious of costs and are taking a wait-and-see approach," he says.

O'Connell believes the IT industry will benefit from an increased drive among other companies to cut costs.

"More companies, including county councils, are looking at IT as a way of becoming more competitive and efficient," says O'Connell.

Alan McQuaid


With the global economy looking "quite strong", Ireland could come out of recession as early as May, says McQuaid, chief economist with Bloxham Stockbrokers. "In the initial stages of the recovery, highly skilled workers will do well.

"It will be hard for people with low skills to get jobs though. The construction sector has gone for the foreseeable future." With this in mind, it will take a while for any economic recovery to feed through to the property market, adds McQuaid. "If the economy recovers in the second half of this year, you may see house prices pick up in the second half of 2010. Overall, I think house prices will fall by between 10 and 15 per cent this year but you may see a modest pick up in prices towards the end of the year. Over five years, the average increase in house prices will be between five and six per cent."

Colin Morgan

Insurance boss

The chief executive of Quinn Insurance believes Ireland will emerge from recession in the second half of the year.

"This will particularly be the case if the global economy continues to grow," says Morgan. "There are a lot of businesses in Ireland that are export-led and an increase in global economic activity will allow them to start growing their businesses again, especially if they have reduced their cost base over the last few years, as many have done."

Robert Dunn

Telecoms boss

Dunn, the CEO of UPC Ireland, believes it is inevitable that Ireland will come out of recession this year.

"The level of economic activity is so low, we've got to a point where we've got to start growing again," says Dunn. "Any economic recovery will be export led, particularly from the farming and technology sector where you're already starting to see demand increase." However, any economic recovery will be "finely balanced", adds Dunn.

"There are opportunities out there now and some sectors have weathered the economy very well. But the potential negatives (for the economy) will be the impact of wage cuts as well as cuts in the National Development Programme. The question is whether or not the positives will outweigh the negatives."

Adrian Hegarty

Life assurance boss

The group chief executive of Friends First expects Ireland to come out of recession by the end of June -- but still thinks 2010 will be a challenging year.

"In the first half of 2009 the economy was in freefall so a year-on-year comparison should see a bounce in the first half of 2010, technically taking us out of recession," says Hegarty.

"One of the big positives is the rise in consumer confidence following the decisive cost-cutting actions taken in the last Budget. People now believe that we are taking the actions necessary to manage our way out of the current mess. In addition, the world economy is emerging from recession and this will be beneficial to Ireland."

Hegarty, however, believes there will be a "hangover to the recession" throughout 2010. "More companies who were just hanging on during 2009 will go out of business," he warns.

"While the pace of job losses is now levelling off, it is unlikely that any recovery in the labour market will occur during 2010.

"Businesses in the consumer sector will continue to be undermined by an increase in the personal tax burden, cuts in government spending announced in last month's Budget, and wage cuts in the public and private sector.

"The construction sector will remain very weak during 2010 and into 2011. Credit availability will continue to be a key area of uncertainty this year. In addition, given the perilous state of the public finances, there will be serious pressure on government ahead of the next Budget to cut spending further and increase taxes."

Tony Foley


Foley, a senior economics lecturer with Dublin City University, believes there is a 50/50 chance that gross domestic product (the value of goods and services produced) in Ireland will be higher in 2010 than in 2009.

"As long as there is no new international crisis, no new Irish fiscal crisis and no banking disasters, the Irish economy will definitely be growing in the second half of 2010," says Foley. "The main source of growth will be the multinational-dominated export industries." However, with expenditure by government and consumers set to be weak this year, it will be some time before we're out of the woods -- even if the recession ends, adds Foley.

"While the recession will be over, there will still be major difficulties for industries that depend on ordinary consumer expenditure and these constitute the vast majority of enterprises in the economy," he says.

"The end of the recession will not be a panacea for small and medium-sized enterprises. Neither will it recover lost employment and economic activity.

"It will not save many hundreds and possibly thousands of firms who are barely hanging on at present, living on supplier credit or unfulfilled hopes of a big and quick recovery.

"There are also likely to be serious problems with personal and business debt."

Sunday Independent