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Forewarned, but at least forearmed

IT is often said that, however bad things may be, the more we know of what is coming, the better.

In which case, perhaps we should welcome the cold shower that is the latest analysis from the Economic and Social Research Institute (ESRI).

This is a seven year recession, its analysts say, which means we are only half way through it. But if they are right, at least, we are half way through it.

Better to plan for that, and perhaps be pleasantly surprised, than postpone unpleasant decisions, whether by a firm or a household, and find that it hasn't worked out.

The ESRI thinks the government is coming round to the idea of fleshing out the 2013 Budget alongside the 2012 one, so that people can get some sense of what the future holds.

The institute gives its own forecast for what next year holds, with a 10pc rise in taxation wiping out a very modest rise in wages.

A bit more certainty might help reduce a savings rate now put at 13pc of incomes. Some of that extra "saving" is people paying more for mortgages.

At least interest rates have peaked for now, and the next move may even be downwards.

Combined with any reduction in real saving, that might provide the first glimmer of domestic growth, as distinct from growth in exports.

The ESRI sees a pathway towards that elusive recovery.

It thinks the Government will be able to meet next year's targets without much addition to the €3.6bn adjustment planned at present.

Beyond that, the very favourable interest rate deal agreed with the EU could see the public finances clearly on a sustainable path by as early as 2013.

The marked fall in Irish interest rates on the bond market suggests others may share the ESRI view.

Getting there will be neither pleasant nor quick, but it will help if people believe it can be done.