News from Ireland

IRISH ECONOMY AT THE CROSSROADS The severe downturn in the Irish economy which was in part fuelled by a property bubble and which has been compounded by world events is at a critical juncture. The Irish government has acted decisively and increased taxes significantly while reducing spending. It has also recapitalised the banks and plans to set up a 'bad bank' to absorb the dodgy loans that the banks have lent out over the last decade. Their policies have not met with universal approval although Brian Cowen's government will take heart from a recent IMF report that, although critical of government policies that led to the problems, is broadly approving of current remedial actions. Whether these policies work or not will define the economic outlook for this country for the next 5 years and possibly longer. Recent property bubble collapses in Japan and Sweden are often cited by economists here as examples of the devastation that can befall an economy if a property market collapse is not handled correctly. Other commentators suggest that it is ridiculous to compare an economy of the sizeof Japans to that of Ireland. Opposition political parties have been quick to, on the one hand blame the government for all of the problems while on the other hand criticizing everything that the Fianna Fail and Green Party coalition have done to remedy the problem. Both Fine Gale and Labour expect to take over the reins of office in 2012 especially after the thumping that the government parties received at the recent local and European elections. While the opinion polls are in their favour there is more at stake here than which simply political party is in power. Should the world economy recover within the next two years (as seems likely) but Ireland gets left behind, then the prospect of long unemployment queues and emigration could blight the economic landscape for the next decade. If the harsh tax increases and public service cutbacks are matched by the promotion of Irish development in the technology sector however, then Ireland could be well placed to recover in tandem with the broader world economies. It is a high stakes game not just for the fortunes of Fianna Fail and the various political parties who would replace them, but also for a generation of school-leavers and graduates who are looking for jobs, as well as those at the other end of the employment cycle who are about to retire. GOVERNMENT PARTIES GET AN ELECTION WHIPPING The results of the local and European elections are in and it does not make good reading for the ruling Fianna Fail and Green Party coalition. Both of the government parties were severely punished for their handling of the economy with Fine Gael and Labour showing the biggest gains. A very quick look at the share of the local election votes shows that, if the trend were repeated in a general election then a Fine Gael and Labour coalition would easily sweep into power: Fine Gael 32.2%Fianna Fail 25.4% - government partyLabour 14.7%Sinn Fein 7.4%Green Party 2.3% - government partyOthers 18% Therein lies the problem for Fine Gael and Labour. The general election will not be held until 2012 which is plenty of time for the economy to improve and sentiment to swing back somewhat to Fianna Fail. The Greens look doomed with the Irish electorate having a history of punishing smaller coalition parties. Despite the best efforts of Fine Gael to force a general election immediately Fianna Fail know that to allow that to happen would be political suicide. NEW LISBON TREATY TO BE HELD IN THE AUTUMN Recent opinion polls have shown that a re-run of the Lisbon treaty would be passed in Ireland, especially given the current economic malaise. The 3 anti-Lisbon candidates in the recent European elections all either lost their seats or failed to get elected so the government has acted and announced that there will be a second referendum in October. Should the treaty be again rejected by the Irish then both Poland and the Czech Republic will alsorefuse to ratify and the treaty will be doomed, causing an unprecedented crisis within the Union. Defeat would also almost certainly mean the end of Brian Cowen's leadership of the country so it is expected that the government will do all that it can to promote a 'yes' vote. PRESIDENTIAL APOLOGY TO VICTIMS OF ABUSE Irish President Mary McAleese has met with victims of clerical child abuse at Aras an Uachtarain. Over 280 people attended the Presidents residence at her invitation where they received a formal apology for the part that the state played in the decades-long abuse suffered by so many unfortunate children. The President told her visitors:'I know one day in the Phoenix Park cannot hope to restore to your lives all the things that were taken from you. The people of Ireland are desperately sorry for many ways in which you were not cherished, in the abuse itself, in the silence, in the failure to act, in the failure to listen, hear and believe in time.' CONSUMER SENTIMENT PICKS UP A surprising jump to a 14-month high in economic confidence has been recorded by the consumer sentiment index that is compiled by KBC Ireland and the ESRI. The June reading was 53.4 up from 45.5 in May. The improvement in sentiment can perhaps be ascribed to an overall feeling that the worst is over, both in Ireland and in the world economies. Although the banks are still a problem for the Irish economy it is clear that the Irish consumer is feeling more confident than in recent months. Or maybe it is just the good weather we have had recently. Voice your opinion on these news issues here: http://www.ireland-information.com/newsletter.htm A-O-L USERS GO HERE