Saturday 25 May 2019

Stark reminder that we're not out of the woods yet

A demonstrator holds a banner near Portuguese parliament during a protest
A demonstrator holds a banner near Portuguese parliament during a protest

Thomas Molloy

IT hasn't gone away, you know. We have been slowly getting used to hearing good news in this country but the eurozone remains vulnerable to a shock and still has the ability to send the global economy into a tailspin.

The crisis in one of Portugal's oldest and biggest banks was a dramatic reminder that economic uncertainty can flare up at any moment and destabilise the world stock markets.

There are also long-term problems such as low growth that require solutions. Poor figures from France and Germany earlier in the week highlighted once again that the eurozone's recovery is faltering at best.

While the problems in Lisbon were frightening, they also highlighted just how much better sentiment is towards Ireland these days.

The cost of government borrowing rocketed in Portugal and Spain but remained almost unchanged for Ireland; the clearest sign yet that we are now being classed as a semi-peripheral rather than a fully paid-up member of the PIGS club.

There's no room to gloat. It has been some time since our own banks threw up any nasty surprises but that does not mean that all the skeletons have been removed from the cupboards around south Dublin and the IFSC.

We are also unlikely to be strong enough to withstand a full-blown storm even if we weathered this squall.

The Government's new economic plan published yesterday alongside the Cabinet reshuffle shows the political establishment on the left and right have come to the conclusion that it is safe to start spending again.

That may well be the correct analysis but the latest problems of our Iberian bailout partners this week are a stark reminder that we all have some way to go before we can allow ourselves to feel truly safe.

Irish Independent

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