| 6.7°C Dublin

Report is wake-up call to Merkel that we are not 'fixed'

Q I thought we were the "poster child" for austerity. Why is the IMF suddenly so down on us?

The report is a shock to anyone used to reading about Ireland the success story – the best child in the bailout class. It is no accident, however. It was written to shock. The IMF is sending a shot against complacency – but it is not really us they are attacking.

Q If a report about Ireland is not aimed at us, then who is it aimed at?

Remember this document was written by an IMF staff member with first-hand experience here, but will be circulated far beyond Ireland.

Copies will hit the desks of German Chancellor Angela Merkel, European Economy Commissioner Olli Rehn and Mario Draghi at the European Central Bank. They have all been singing our praises over the past 12 months, but doing relatively little to really help put us back on our financial feet.

Q Sounds like a comforting theory, but where's your proof?

The proof is all over the paper. The IMF report includes a blistering attack on European leaders for failing to live up to the promise made in July last year to "break the link" between the State and the banks.

It raises the possibility of a second bailout, and is a wake-up call to Merkel and others, who might be tempted to see Ireland as "fixed".

Q Why would a bank deal make such a difference?

Using European bailout cash to take over our loss-making lenders would have a dramatic effect on the economy, the IMF says, cutting our debt and potentially boosting lending.

Q So is there nothing in this for us to worry over?

Unfortunately there is plenty, including really robust criticism of our own failure to get to grips with the jobs crisis.

Counting people who are working shorter hours than they would like, and those in casual jobs, the IMF says the true picture is that 23pc – close to one in four of the workforce – is looking for work. That's compared to the already high official rate of 14.6pc.

The IMF wants the Government to pour resources into the jobs issue, including paying the private sector to help retrain workers to match the modern economy if that's needed.

Q Fine, we can pay money to retrain people, but what if there just aren't the jobs?

On that its back to Europe. The report says a major risk for Ireland is that weakness in economies outside Ireland make it harder for us to export. The IMF has been beating a drum on this elsewhere, it thinks Europe could be doing more to promoting economic growth.

The ongoing crisis means people are saving, or using spare cash it to pay off debt, instead of getting out and spending. That's a sobering assessment when you remember its barely a week since the Cyprus bailout.

Q Do they say anything about Cyprus?

Yes. Good news. The IMF team says the crisis there has had little impact on our banks.

Q Finally, but the rest of the report is so negative. Are we doing anything right?

We did get a pat on the back for some things, including passing the Personal Insolvency Act and returning to the markets. It also noted that the promissory note deal will help Ireland fund itself through the international money markets.

Irish Independent