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Skating on thin ice as young are driven abroad

As a result of the worst weather spell we have seen in recent years, people all over the country have been skating on ice since Christmas week.

As a result of the worst economic and financial crisis in living memory, the country as a whole is skating on thin ice and Finance Minister Brian Lenihan's plan for recovery could see us all fall through the ice, and condemn the Irish economy for several decades to come.

We know he is determined not to intervene in the housing market or the retail sector in a ruthless attempt to reduce the cost of doing business in Ireland in order to improve the country's competitiveness.

It seems that he is prepared to do so no matter what the short-term human costs in terms of lost businesses, jobs and young people, who are once again leaving these shores in their droves in search for work.

Despite the loss of 133,000 jobs last year and almost 200,000 since the collapse of the country's construction sector, Lenihan, together with his main economic adviser, Alan Ahearne, wants all costs across all sectors in Ireland to fall, and to fall sharply.

For the man on the street, this means further job cuts, further wage reductions, less disposable income in his pocket, and an overall lowering in the standards of living in Ireland.

While in strict economic speak, the policy makes sense, there is a huge personal cost to implementing it, something that no sheltered politician in the Department of Finance or academic in their university ivory tower could every truly understand.

The collective wisdom from those on Merrion Street is that we are going through a necessary but painful adjustment that will steer Ireland back on the road to positive economic expansion.

Lenihan and his officials are committed to taxing and cutting their way out of the recession, rather than opting for the option of a Keynesian stimulus.

The US, the UK, China, Spain, France and others last year all introduced massive stimulus packages in order to kick start their economies, which is now beginning to bear fruit.

In the US, a stimulus package worth $787bn (€547bn) was announced and included federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector.

The Chinese government announced a 4 trillion yuan (€407bn) stimulus package introduced in autumn last year, with more emphasis given to social welfare projects, rural development and technological advancement.

France unveiled a series of measures worth €26bn designed to "revitalise" the French economy, while Spain invested over €40bn in three separate moves.

And the result of such investments are now there to be seen with an upward turn in the global economy.

Back home the story could not be more different.

Lenihan and Co have no appetite for introducing such a US-style stimulus package because the money injected would simply "leak out" to other countries, with little or no benefit to the domestic economy.

"In the US, a stimulus package is a good idea because it is a closed economy and the benefit of it would remain there.

"If we did it, it would leak to the UK to Europe and to the US, resulting in little benefit to the Irish economy," a finance spokesman told me.

The real reason is that there is no money to pay for such a stimulus package here in Ireland, given the ECB is enabling us to keep the lights on through heavy lending.

However, without a stimulus package the retail sector will continue to languish and more people will lose their jobs, and more companies will go to the wall.

Consumer spending will remain weak, while the central exchequer will continue to see its tax revenues suffer.

Jim Power, chief economist with Friends First, agrees that Ireland's cost base is now too high. He said recently: "Quite simply, the cost of doing business in Ireland was allowed to spiral out of control.

"There is now a very strong imperative to bring down the cost base of the economy sharply to restore competitiveness."

However, he did call for a range of measures that would ensure the survival of small businesses.

Despite the rigid and macroeconomic plan to reduce our cost base, its greatest failure is that there is nothing in place to deal with the mass exodus of youth from Irish shores.

There is no solution from the Merrion Street boffins on how to stop the flow of yet another generation of Irish talent to Canada, Australia and to Europe.

According to the latest figures, 150,000 people have left and are leaving our shores to find work elsewhere.

Last week in this newspaper, billionaire businessman Sean Quinn warned that Ireland runs the risk of losing a generation to emigration if growing unemployment is left unchecked.

The chairman of the Quinn Group called for a national plan to get the country's young people back to work -- describing them in stark terms as no less than the "future lifeblood of our economy and society".

His intervention came as the Central Statistics Office revealed that a staggering one in three men under the age of 25 is now jobless.

Quinn, who employs more than 5,000 people in his insurance, hotel, cement and glass-making conglomerate, said: "The level of unemployment now, particularly in the under-25 age bracket, is deeply worrying."

Having experienced at firsthand the recessions of the Seventies and Eighties, he said: "I am very conscious of the extreme negative impact that youth unemployment and forced emigration has on family life, the local communities left behind and the country as a whole, which can take a generation to arrest.

"It should be a priority at national level to develop plans and initiatives that can stem this draining of the future lifeblood of our economy and our society."

Quinn said he believes "the Irish people have the flexibility, intelligence and hunger" to make the country work again.

This stark warning must be heeded, Ireland must not be condemned to repeating the history of the 20th century when far too many of our finest were forced to abandon their home.

Lenihan and Ahearne may be correct in trying to restore Ireland to a more solid export-led economic basis, but they are taking on a task when the country is still in the midst of the mother of all hangovers, and it is our youngest and brightest who are suffering and will continue to suffer the most.

Sunday Independent