Whether they keep their jobs or not, some UK politicians may have to eat their words after Britain's general election of May 6. And if they stay in government, they may wish they hadn't.
nlike Ireland, Britain has failed to grasp the nettle of fiscal correction, postponing the day of reckoning and making sure that day will be much worse than had timely action been taken.
Last year, in a triumphalist diatribe that would have made a unionist blush, Labour Secretary of State for Scotland Jim Murphy described Ireland as belonging to an "arc of instability" including Iceland.
Annoyed, with some justification, at our Government's failure to consult Britain over our bank guarantee scheme, Labour politicians in Britain have a political motive in attacking Ireland's economic record.
With the Scottish National Party (SNP) snapping at Labour's heels in Scotland, the SNP's use of Ireland as a role model was last year seen as blowing up in the party's face. But now the tables have turned. The dilemma of Anglo Irish aside, tough and decisive action by Ireland has turned our economy around faster and in a more sustained way than in the UK. Yes, Britain did record growth in the first quarter of the year. But the stimulus behind it -- flooding Britain's economy with cheap money -- is unsustainable. On Thursday, Davy Stockbrokers were bold enough to predict that our economy also grew in that period. If it did, it was in spite of government cutbacks.
Where Britain's recovery is a temporary pre-election fix, Ireland's is more real. So are our future prospects. Between 1997 and 2007 we created three-quarters of a million jobs. The loss of a quarter-million jobs is a case of "three steps forward one step back".
We need just one more stride forward in the coming decade to eliminate the current unemployment count of 267,000.
Recently a BBC report announced that the recession would wipe 15 per cent off Ireland's GDP. True. But even after this, Irish living standards will still be a third higher than Scotland's and our fiscal situation -- while serious -- will be better than Britain's.
Here's why: between October 2009 and December 2010, just 15 months, Finance Minister Brian Lenihan reduced the size of our fiscal crisis by 5 per cent of GDP, more than all Britain's political parties plan to do over the next five years. Further adjustment is needed, of course, but if Lenihan can stay the course our deficit will fall to 3 per cent of GDP by 2014, or as close as makes no difference -- a fact that Friday's news that the EU Commission has decided to count €4bn put into Anglo Irish Bank does not fundamentally alter.
At 65 per cent of GDP, our underlying debt looks bad. But look again. Still at or lower than the EU average -- and set to stay that way as long as the Government stays the course -- this debt level belongs to a country with one of Europe's youngest and fastest growing populations.
'Irish living standards will still be a third higher than Scotland's and our fiscal situation will be better than Britain's'
In other words, a country with good reason to borrow. Competitiveness, too, is improving with wages down 6 per cent since the boom. Compared with competitor wages rising 3 per cent since then, this ups our competitive position by 10 per cent. There is further to go.
But our internal devaluation, the sane alternative to the insane idea of leaving the euro, is now under way and, if completed, will restore conditions for jobs growth by 2012.
Now look at Britain. It does not have our young population, nor our magnitude of population growth with the attendant need to borrow. For that reason its public debt to GDP ratio of around 70 per cent of GDP is -- although it looks better -- actually significantly worse than ours.
And given the fact that its property crash was -- while significant -- less dominant in its recession than was the case here, the fact that it's fiscal deficit is more than 11 per cent of GDP reveals a far more worrying and deep-seated crisis in the governance of the sceptre isle. Most worrying of all is the fact that none of Britain's political parties are being specific about the nature of cuts needed to tame Britain's yawning deficit, which is heading for £170bn (€196bn) this year. Its approach to competitiveness -- devaluation -- is the failed method tried by the Italians in the Seventies.
Our approach -- cutting costs and driving science, research and development in the smart economy -- is the successful approach that has made Germany Europe's strongest economy.
If implemented in Britain in proportionate terms, Lenihan's last three budgets would have solved most of fiscal crisis. So Brian Lenihan for PM then? Not quite.
A quick look at the politics of all this shows that the impressive difference between Lenihan and his opposite number Alistair Darling has much to do with the timing of elections. In Britain, Labour has argued that its policy of deferring cuts is aimed at "nursing" the economy through recession. But, of course, the real "nursing" going on is of marginal Labour seats.
Labour cannot afford to take the action it needs to so close to an election. Doing so makes a Tory win more likely (the Nick Clegg phenomenon aside).
As for us, knowing that the economy has a chance of recovering by 2011 and that tough action taken before then would give the Government some chance of entering the next election on an upswing, Fianna Fail and the Greens had an incentive to act.
Faced with a recession in its last 18 months of office, Britain's government did not.
'Coleman at Large' is on Tuesdays and Wednesdays from 10pm on Newstalk FM
