Thursday 23 January 2020

'Response to homes crisis could lead to another recession'

Senator Seán Barrett: warns of another economic crash. Photo: Tom Burke
Senator Seán Barrett: warns of another economic crash. Photo: Tom Burke
Wayne O'Connor

Wayne O'Connor

Responses to the country's housing crisis are laying the foundations for another economic crash, according to Senator Seán Barrett, a leading member of the Banking Inquiry.

He warned that an inability to respond to a financial meltdown still existed in Irish politics and the public service.

Senator Barrett, an economist, said that unless cultures in the banking and construction sectors were revised, we would see another economic collapse.

We were, he said, building over-inflated houses because the profit margins for developers building appropriately sized family homes were simply too small.

"We need to get some producers to start off as small as Ryanair did in its beginning," he said.

"That can give us targets of producing houses on a small scale, maybe at four times the price of average earnings.

"Why are we looking at houses for €1.7m, when we should be looking at houses that cost €160,000 - which is four time the average earnings?"

He added that a number of steps needed to be taken to prevent a future economic collapse.

In a working paper he wrote on the wake of the Banking Inquiry, Mr Barrett highlighted a need for action to be taken against senior bankers when shortfalls are detected or government intervention is required.

"In addition to changes in leadership, there arguably should have been penalties enacted against senior bank leadership that deliberately ignored sound data and information," he said.

Irish Independent

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