Saturday 16 February 2019

Editorial: 'We've recovered well - but must not get carried away'

Taoiseach Leo Varadkar alluded to the risks to the Irish economy yesterday during a conversation with German Chancellor Angela Merkel. Photo: Tom Honan/PA
Taoiseach Leo Varadkar alluded to the risks to the Irish economy yesterday during a conversation with German Chancellor Angela Merkel. Photo: Tom Honan/PA
Editorial

Editorial

He paid the price for being premature, but Enda Kenny's jarring 'Keep the recovery going' mantra has come to pass.

In a country so scarred by the whiplash of austerity, a narrative of continuous improvement grated. We had been fooled before. Besides, did Sophocles not warn us: it is the merit of a general to impart good news, and to conceal the truth?

The price of ignoring the writing on the wall was 10 years of turmoil.

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But in March 2018, Irish Independent columnist Dan O'Brien declared the decade over. His analysis was based on the fact continuing strong employment growth for the year would surpass the 2007 high.

Success, they say, has many fathers, while failure is an orphan. So it was no surprise to see Taoiseach Leo Varadkar out first to bring us the good news that the nation's finances were finally in surplus, the first time since we went off a cliff in 2008.

A singular achievement for a nation reduced to near financial ruin. Our sovereignty was compromised, our banks bust and our best were leaving the country in waves as the economy flat-lined. Ability to absorb unprecedented austerity measures and the biggest transfer of private debt onto the backs of a sovereign State in history took a terrible toll, but we didn't break.

Yet we ought not get overly excited. News of the €100m surplus must be seen in the context of a national debt of €100bn.

It also comes on the heels of another severe scolding from the Irish Fiscal Advisory Council (IFAC) over Government's management of the public purse. The bounty was generated by record corporation tax receipts, which hit €9.4bn in November. As Mr Varadkar acknowledged, such windfalls cannot be relied upon indefinitely.

The massive haul from the transfer of multinational assets here and from corporate profits is far from a given. With Donald Trump at the helm in the US with a determination to go tête à tête with China on trade, it would be foolish to ignore the possibility of a downturn. Brexit is also an ominous cloud on our horizon. Mr Varadkar alluded to the risks yesterday during a conversation with German Chancellor Angela Merkel. He said it would be "helpful" for other EU leaders to know what kind of assurances would command a majority in the House of Commons, to avoid a no-deal catastrophe. We know such a scenario must be prepared for. It would result in significant tariffs on trade both ways.

Only this week a Government minister warned we could soon be returning to Brussels with open hands looking for help.

The concerns of the IFAC at a failure to rein in public spending are real.

Enormous corporate tax receipts must not obscure fundamental realities.

Irish Independent

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