Ireland's economy still has a very healthy pulse
The financial engineering required to restore the Irish economy can be implemented -- now the Government must facilitate the growth and development of business, says London-based business analyst Oliver O'Connor in this article, which is reproduced from yesterday's 'Wall Street Journal'
Some recent headlines and commentary seem to suggest that the Irish economy has all but collapsed. It hasn't, and it doesn't have to.
Ireland has had a property bubble and crash, a regulatory failure, a banking disaster and a fiscal crisis. Now, Ireland is caught up in the great macroeconomic issues of our times: how deep and how fast to cut debt; what will promote sustainable growth; the governance of the euro and its monetary policy; how to fix banks and who should pay; and bond investors' attitudes to sovereign risk. It's an uncomfortable place for a small country to be in.
Ireland's macro and fiscal challenges are real, well-known, and openly disclosed. The recurrent government deficit has to be cut to 3pc of GDP from nearly 12pc in just four budgets. A credible four-year plan has to be published this month, and by December 7, the Government must produce a 2011 budget with €6bn in savings. The brunt is to be borne by spending cuts. By early next year, Ireland will have to return to debt markets.