Can Ireland recover despite Fianna Fáil?
With Ireland being plunged into a double dip recession, Fine Gael Finance Spokesman Michael Noonan TD has said the country must get rid of this terrible Government before it inflicts further damage on the economy.
Along with Iceland and Greece, Ireland is one of the few countries in the world to suffer negative growth in the second quarter. If we needed any evidence that the Government’s economic policy is a disaster, then we have it now.
It could be argued that despite Brian Lenihan’s bluster, the recession never ended at all. GNP fell again in April-June for the ninth consecutive quarter, and was a shocking 17% lower than its peak in the first quarter of 2007. No other country in the industrialised world has experienced such an economic disaster since the Second World War.
These figures are the worst possible news for hard-pressed families and businesses across Ireland. This week has already seen a litany of bad economic news about unemployment, emigration, families unable to pay their bills, and interest rates.
It’s clear that this Government cannot be trusted to get Ireland working again. 2010 was the year to sort out the economy. Instead, Brian Lenihan poured all his efforts into bailing out failed banks.
No matter how Minister Lenihan tries to sell these figures as ‘stabilisation’, he didn’t see it coming. At the start of the month, he said: ‘We are seeing an economic stabilisation, and growth as well’.
Instead of the predicted growth, the economy may actually shrink this year. That’s the last thing anyone wants to hear as we gear up for the one of the toughest Budgets in Irish history. Brian Lenihan may well decide to impose even deeper cuts and higher taxes than planned.
Brian Lenihan's glib response is that exports will eventually take the economy out of recession. These figures show that Fine Gael was right from the start. We cannot have strong export-led recovery until we cut Government imposed costs in areas like waste, energy and local charges, get credit flowing and fix the infrastructure deficits in areas like broadband that are holding back small and medium sized businesses. That is why export growth stalled in the second quarter, even when our export markets in the EU and the UK were growing very quickly.
The Government made a huge mistake by slashing €1 billion from spending on vital infrastructure in the first half of this year. If the Government had delivered on its own targets in spending on infrastructure, the economy would probably have grown in the second quarter.
The most frightening aspect of these figures is that Ireland is back in recession when the rest of Europe is growing strongly. But economies across Europe and the industrialised world are now slowing down again, which means Ireland may have missed the boat when it comes to strong export-led recovery.