A Milestone in Politics to Coincide With a Milestone in Economics
Truly excellent article about Irish politics, economy, and austerity.
It is a milestone in politics; but it coincides with a milestone in economics. The state visit by the Irish president Michael Higgins comes at a time when his country’s economy is at last creating jobs in solid numbers, a sign that the recovering world economy is pulling even those countries most savaged by the recession back to growth.
Ireland is fascinating not just because it happens to be the UK’s nearest neighbour, with a land border, all the links of language and culture, and be the UK’s fifth largest export market. It is an extreme example of many of the trends in the world economy over the past decade.
Ireland has been, in proportion to its size, the most successful country in the world at attracting inward investment, and through the 2000-2007 period the fastest-growing developed economy. It had just about the most extreme property boom, and the most extreme subsequent collapse. It had proportionately the biggest banking crash, and - Greece apart - the severest collapse in GDP. And now it is the first of the eurozone’s troubled fringe to start perking up, for the flip from stagnation to growth seems at last to have occurred.
But job growth is now solid at 60,000 last year, roughly the same as the UK proportionate to the two economies, and the Central Bank forecasts unemployment to fall from 13.1 per cent last year to 11.3 per cent this year, and to 10.5 per cent in 2015.
People will try and draw specific conclusions from this, and in Europe one of the messages you hear is that austerity works. That does, however, ignore the human, social and regional costs - the fact that so many people had to leave the country to get jobs, the debt burden on people who bought homes near the top of the market, and the minimal recovery outside the Dublin agglomeration.
A wider and perhaps more useful conclusion is that the rising tide of the world economy is floating all boats. Yesterday we had the new forecasts from the International Monetary Fund, where the headline was another boost to the UK, which it now expects to grow by 2.9 per cent this year. Less noticed was the reasonably upbeat tone for the world economy as a whole - slightly slower in the emerging world, slightly faster in the developed.