My man in Dublin calls with joy in his voice to tell me ‘the Troika’ — the combined powers of the EU, the European Central Bank and the IMF — have signed off Ireland as fit to leave their bailout programme and return to economic self-determination. This is a remarkable turnaround in just three years since I visited the Irish capital in the midst of rescue talks — to find a nation in shock, staring at an €85 billion emergency loan facility that equated to €20,000 per citizen, a collapsing banking system and a landscape scarred by delusional, never-to-be-finished property developments. In the special Irish way, almost everyone I spoke to told me ‘a bit of luck’ was all that was needed to get them through the crisis — but the outcome has had very little to do with chance and everything to do with knuckling down to the necessity of reform and austerity.
Ireland’s ‘bad bank’, the National Asset Management Agency, has effectively corralled the worst of the property lendings. The surviving banks, having at one point needed €150 billion of EU funding between them, have taken strides to strengthen their balance sheets. The Fine Gael government made deep cuts in spending ordered by the Troika, but maintained relatively attractive corporate tax rates in the face of pressure from the French to make Ireland less competitive as part of the rescue price. Faced by surging job losses, many Irish went abroad to find work, and some eastern European migrants went home: unemployment is high but trending downwards, while inflation has dropped below 1 per cent. GDP growth is only just in positive territory this year, but the European Commission expects 1.7 per cent next year and 2.5 per cent in 2015.
Overall — and despite carping by Nobel laureate doomster Joseph Stiglitz about the bailout mistakes he thinks have contributed to a ‘lost decade’ for Ireland — what’s happened over the water demonstrates to southern Europe the possibility of turning a busted economy around so long as the populace accepts that what went before was folly and that euro membership was never a badge of permanent gilded entitlement. The Irish recovery is also an example of how politicians can win by staying calm and smiling: in December 2010 I described the then opposition leader — shortly to become Taoiseach — Enda Kenny as ‘almost invisible’. But he has come through in such good standing that my well-connected Dublin source says Enda is now worth a bet to succeed José Manuel Barroso as president of the European Commission next year. And perhaps that will be a timely move, because my man adds excitedly: ‘And you know what? The banks are hot to lend again. Property prices are soaring!’
This is an extract from Martin Vander Weyer’s Any Other Business column in the latest issue of the Spectator. Subscribers can read the rest of the column here. Non-subscribers can join us from just £1 a week.
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