Ireland nears end of Troika bailout

This article first appeared in the Independent (UK) on 13 October 2013

IN the lobby of a shopping centre in Kildare Town, a sign advertises a wedding dress for sale, long with three matching flower girl outfits. It is perhaps a sign of the times.

Several of the units in the small centre are unoccupied Two minutes walk away in the local town square, several businesses have closed, including the local video store and the clothing stores which couldn’t compete with a major factory discount outlet on the edge of town. With three supermarkets within fifteen minutes walk, the shopping centre is fighting hard for customers.

Kildare was a typical Celtic Tiger boom town. Once plagued by a constant trundle of articulated trucks through its main street, it was transformed in 2003 when the main Dublin-Cork motorway opened, relieving it of the traffic chaos that made it a bottleneck, and attracting young Dublin couples fleeing the sky-rocketing property prices in the capital 35 miles away, making the trade-off between lower house prices and longer commutes.

IMF managing director Christine Lagarda, Irish finance minister Michael Noonan, and Italian economic affairs minister Fabrizio Saccomanni. Image via Flickr/EU Council Eurozone
IMF managing director Christine Lagarda, Irish finance minister Michael Noonan, and Italian economic affairs minister Fabrizio Saccomanni. Image via Flickr/EU Council Eurozone

But Irish businesses are optimistic about the future, as Fergal O’Brien, chief economist with IBEC, the Irish Business and Employers Confederation explains.

Jobs are being created, he explains, and although the next two government budgets with include further cuts in public spending, the cuts will not be as deep as previously. In the medium to long term, he expects the annual growth rate to return to 3% or more.

“The budgets should take about 1.5% out of the economy, but we’ve had budgets that cut twice as deep as that, and after 2015 the budget cutbacks should be completed,” he says. In particular, export-led businesses are well placed to exploit a recovery in international sentiment, he says.

O’Brien even sees room for optimism in the construction industry, which showed 8,000 new housing starts last year.

“We will never get back to the level of 80,000 starts we saw at the peak,” he says, and we wouldn’t want to. But employment growth is returning, and we should be able to get to a level of about 30,000 starts,” he says.

“Ireland had gone through a balance-sheet recession of unprecedented proportions,” says Constantin Gurgdiev, an economist and academic at Trinity College Dublin. “Given the severity of Ireland’s crisis to date, we can expect under normal conditions a recovery, 20-30 years period of subdued growth and continued pain.”

“Perhaps we will be able to put in place the right set of reforms. So far we are not really there yet, but we can get there, that’s possible. The biggest missed opportunity of the entire crisis was dealing directly and resolutely with the issues of debt overhang, in household and government debt.”

The economist praises export-focused domestic companies, which compete with multinationals like Google to attract talented graduates, as “better on average than the big multinationals because they don’t have the benefit of tax arbitrage. They have to operate on a basis of pure competitiveness”.

But he says the domestic economy is still shrinking, as is the public sector, and the export sector “is too small to carry the entire country on its shoulders.”

One example of the new Irish economy is the Web Summit organised in the midst of the recession in 2009 as an event for 200 people. It has grown into Europe’s biggest technology event with 10,000 people attending and 950 start-ups from over 90 countries exhibiting in the RDS.

Crowds at Websummit. Image via flickr/websummit

“This year we have CEOs of 199 private technology companies that have raised $5.9billion dollars of funding attending the event as well some high profile people speaking in Dublin, people from the World Economic Forum, the Evernote ceo Phil Libin, and Skype founder Niklas Zennström,” said ceo Paddy Cosgrave.

Last weekend the IMF published their second last Ireland report, with the final one due in December. It might be summarised as “A lot done, more to do”, the election slogan of then-governing Fianna Fáil party at the height of the Celtic Tiger in 2002, with its warnings about the continued fragility of the banking sector, and the need to stick to government commitments to cut spending.

In the run-up to the report, ministers pointed to declining unemployment, which dropped to 13.1% (at its peak it stood at 17.3%). But the figures are helped by the almost 200,000 people who left the country since 2008. Dublin photographer David Monahan has documented the experience of emigrants for the past three years.

“I photographed all nationalities,” he said. “I wanted enough images to get a good cross-section of the community.”

“I photographed a lot of single people and some couples, but the idea of families moving wasn’t such a big runner until the last year or so, when the recession had bitten well in. Then the big decision came for families. It was an easier decision for people who are unattached.”

A study published at the end of September found most find work abroad (47% had no work before leaving, but 87% found employment abroad), but not everyone finds what they’re looking for.

“One guy went out Australia,” recalls Monahan. “He was an electrician, he was out of work for two years here. But he couldn’t get work as an electrician, and ended up getting a job with a roofing company in Adelaide.”

Aileen Donegan from the Dublin suburb of Clondalkin works in Strasbourg with the No Hate Speech movement, a project supported by the Council of Europe, but she expects to return home early next year.

“I really miss home, it’s more than likely I’ll be back next year,” she says. “I wasn’t working before I headed off. I had just finished an internship.”

“But I do want to get home if I can, I really miss Dublin. It’s crazy, I hadn’t planned on living abroad at all. There was nothing happening in Ireland, there was nothing happening where I was at the time, nothing related to what I wanted to do in life, which is in journalism. It just wasn’t available so I decided to take my chances and leave.”

“I plan to go back to Dublin to try to do some freelance work in journalism, to try to build up work experience in my chosen field. It’s unlikely, but I still want to go back and try.”

Disability Rights activist Suzy Byrne sees little prospect of improvement for those still depending on state supports.

“I don’t see any light at the end of the tunnel”, she says. “There has been no equality proofing of public sector budget.”

“We’ve seen either things being cut completely or things not being reformed that were bad in the good times anyway.”

“A lot of farmers who are part-time farmers, who had other part-time jobs, don’t have those jobs any more. That’s quite significant in certain areas,” says Wexford livestock and cereal farmer Tom Doyle. But he says farmers are feeling more optimistic about the future as food prices increase.

“But there is a renewed interest among young people in farming, and we would hope there are realistic prospects for them. Part of it is because there aren’t as many alternatives as there were in the past. There were a lot of young people who could have gone into farming 10 or 12 years ago, but saw better options elsewhere. Those options are not there any more.”