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The most unlikely of casualties

The Irish economic crash has claimed casualties in the most unlikely places.

While all of us are familiar with tales of property developers short of a hundred million with which to repay their bank loans or of neighbours and relations who have lost their jobs and can no longer make their mortgage repayments, less well known is the plight of the so-called "poor rich".

As we report in today's paper, there is a group of people -- professionals, entrepreneurs and managers, many of whom still earn more than €100,000 -- who have effectively been wiped out by the property crash.

Not surprisingly this group, which has been dubbed the "poor rich", have attracted little sympathy. With their gross incomes it has been generally assumed that they can afford to get by.

But many of them can't.

Apparently high gross incomes are more than accounted for by the collapse in property values, which has left them with mortgages and other property-related debts they are no longer able to repay.

In addition many of them have also seen their admittedly high gross incomes fall and their remaining income has been savaged by higher taxes and the reduction in property tax reliefs.

Faced with the plight of these individuals, most people's response would be one of: so what? Surely there are cases more deserving of our help and sympathy. These were well-off, well-informed people who knew what they were getting into. Surely their problems are no one's business but their own?

Things aren't that simple.

The "poor rich" include two groups upon whom we will largely rely to pull us out of the current economic depression.

For generations the professional middle classes have been the backbone of Irish society. Our leaders, for good or ill, have been drawn disproportionately from this group.

Meanwhile, it is to our entrepreneurs and managers that we will look to create the new jobs that will be required if we are ever to make a meaningful dent in the dole queues.

Unless the problems of the "poor rich" are dealt with sympathetically, our capacity to recover from our current difficulties will be seriously weakened.

Already there are clear signs that many of them are taking advantage of Britain's more liberal insolvency regime to declare bankruptcy across the water. Having made the trip to the UK, many of them won't return. They will contribute to the British and not the Irish recovery.

This makes it vital that the Government stops dragging its feet on reforming our hopelessly outdated insolvency laws. It's time to get real.

Many mortgages and other property-based loans will never be repaid in full. Pretending that they will merely prolongs our agony unnecessarily.

The banks have been recapitalised by the Government, which should now force them to start cutting debtors some slack. Reforming the insolvency would facilitate this process.

Until that happens, the "poor rich" won't be able to make any meaningful contribution to Irish economic recovery and we will all be the poorer for that.

Irish Independent