Wednesday 17 July 2019

Editorial: 'These uncertain times have left economy vulnerable'

NTMA boss Conor O’Kelly. Photo: Frank McGrath
NTMA boss Conor O’Kelly. Photo: Frank McGrath


The boom may be back but we have to be careful that it does not become "more boomier", to borrow the famous phrase coined by former Taoiseach Bertie Ahern.

There are already signs that things are hotting up and that we may be starting to lose our competitive edge. The danger is of the economy overheating with rising prices leading to higher wages and inflation once again.

Much will depend on Brexit and on whether there is an orderly or disorderly UK withdrawal from the EU. Both Boris Johnson and Jeremy Hunt are playing a 'no deal' game of bluff and are trying to outdo each other's promises for lavish spending sprees in order to become Britain's next prime minister.

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As Matt Frei, Europe editor with Channel 4, told an Ictu conference yesterday, the debate about Brexit in the UK had reached the "bonkers" phase. More people were concerned with the purity of their position than any benefits that might accrue from leaving the EU.

It was "almost like a religious debate" from the 14th century, and involved a macho competition about who can deliver the most pure form of something that most leaders of the Conservative Party do not actually believe in, he added.

In framing the next budget, our Government has to anticipate and plan for different Brexit scenarios.

It also has to take into account the warning from the American Chamber of Commerce in Ireland about the three big concerns of US multinationals here - the quality of Ireland's housing supply, infrastructure and planning. There are more than 155,000 people employed by 700 US corporations in Ireland at present and the Government ignores the chamber's warning at its peril.

US firms have traditionally been good employers here, and foreign direct investment remains robust. But in an era where the key resource for industry is skilled workers, keeping those workers happy has never been more important for employers.

On the overall jobs front, however, ministers can point to the record numbers at work - more than 2.31 million - and the fact that our jobless rate at 4.5pc is the lowest for more than a decade.

Comforting as these figures are, the CEO of the National Treasury Management Agency (NTMA) Conor O'Kelly reminded us that Ireland still has a "mountain of debt" to repay. Gross debt is €205bn, which is four times what it was before the recession. "There is," as he said, "only one way to get down a mountain - very carefully and very slowly." Our debt makes us vulnerable if there is a downturn in the world economy, said Mr O'Kelly, who added that people were asking if the bond market was predicting a recession.

Years ago, the US Nobel Prize in Economics winner Paul Samuelson joked that the stock market had predicted nine of the past five recessions.

Yesterday the NTMA boss appeared initially to put his reputation on the line by telling the Public Accounts Committee that "the chances of a recession in Ireland are 100pc". Fortunately he clarified later that he was talking about the long term. Let's hope he is right.

Irish Independent

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