Tuesday 17 September 2019

Donal O'Donovan: 'Signs point to trouble and our thriving jobs market could be the last hurrah of a boom now past its peak'

(stock picture)
(stock picture)
Donal O'Donovan

Donal O'Donovan

If the next economic crash has already left the station it may already be too late to get off the tracks.

That's the stark message in a report from the Parliamentary Budget Office (PBO), which provides independent information to TDs and senators.

The key risks are not necessarily new.

Public spending over the past few years has depended on corporate tax receipts that could disappear as quickly as they emerged. If there is a crash, demands for what cash is available will be second in the queue after the costs of servicing the massive national debt - almost entirely run up as a result of the last crash.

But are we on the brink of an economic shock?

A hard Brexit at the end of October could certainly kick the stool out from under a swathe of the Irish economy.

In a worst-case scenario the sale of Irish-made goods and Irish services into the UK will be sharply curtailed, with knock-on effects across the economy.

Imports from the UK - a massive part of the Irish economy - would also be hit. Disruption means cost, so in a bad Brexit we can all expect to pay more here for everything.

However, Brexit is just one of the clouds on the economic horizon. Germany looks like it is already in recession. The European Central Bank (ECB) is so worried that the economy is flatlining it plans to throw the kitchen sink at it next month - cutting interest rates and pumping billions into the financial system

And that's before you even consider the looming global trade war.

The world's two biggest economies are locked in an increasingly belligerent relationship that threatens to undo the unique global trade infrastructure.

It is easy to take it for granted, but the past decade helped flood the world with life-changing US-designed, China-built technology and kick-start an age of digital transformation.

The US-China scrap could topple the world economy - starting with small, open economies like ours.

The booming Irish jobs market, and the heaving bars and restaurants of Dublin look increasingly like the last hurrah of an economy passing its peak.

Irish Independent

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