Will large numbers of the water protesters support fundamental changes to the way the economy is run?

We are still working harder for less money. That is why the recovery does not feel real for many people. It is the economic backdrop to the mass protests. Things aren’t getting worse for many households, but they aren’t getting a lot better either.

How this will affect the next general election is a big question. Were the marchers on Wednesday “just” looking for an end to water charges, or will large numbers support fundamental changes to the way the economy is run?

The Government’s challenge is to persuade people that ploughing on is the best approach – but the catch is that people are not feeling the recovery in their pockets.

The latest CSO figures are crystal clear. In the third quarter of 2014 weekly earnings continued to fall, and were almost 1 per cent below the same period last year. We are earning less in real terms than we did in 2007.

Employment

Of course there are wage rises in some sectors and recruitment experts say more can be expected. Also, crucially, the recovery is showing through in an increasingly solid increase in employment in the economy and a fall in unemployment.

Whether 2015 will bring some kind of tipping point in the public’s perception of the economy is debatable. The GDP growth figures – the latest set of which were published during the week – have been generally strong but are subject to huge distortions. Annual growth remains healthy, the latest figures suggest, but the third quarter showed barely any overall growth and consumer spending remains flat. Most indicators suggest a solid recovery is under way, but the gains to the public are filtering through slowly.

People are not spending more for the rather obvious reason that most don’t have any more money – earnings have fallen and the enormous disposable income “bomb” has hit households via extra taxes, charges, health insurance hikes, train and bus fare rises, higher rents and all the rest.

Like voters all over Europe, the Irish electorate is asking where this will all go next, and what they will decide is still far from clear.

How many of the marchers would support the radical policies put forward by those who addressed them is impossible to gauge. We will get some idea in the months ahead as those under the anti-austerity banner try to use the protests as a springboard for a wider political campaign. Recently-elected TD Paul Murphy has said the alliance plans to field a candidate in every constituency at the next election.

The radical left-wing policies put forward by the alliance and many of the groups who marched under its banner would represent a seismic shift. They focus, broadly, on three areas – the national debt, tax and the role of the State in the economy.

The alliance and the Socialist Party, which is a central player in it, are part of the repudiate-the-debt campaign. For example, the Socialist Party would support a stop on the repayment of our €8 billion national debt-servicing bill, followed by a decision on which debt holders should be repaid and which should be reneged on, the latter category to include the EU and IMF, so-called speculators and so on.

Sinn Féin, also prominent at the march, take a less extreme view, but has pushed the Government to take a harder line in negotiating with Europe the part of our national debt related to the bank bailout.

The other main economic policy platforms of those addressing the marchers are calls for big tax hikes on higher earners and the rich – including a wealth tax – and a much greater role for the State in directing economic policy via State ownership and control.

The more extreme of these policies, the ones calling for debt repudiation, would involve significant economic risk and disruption. If you stop repayments on the national debt you need a plan for how you are going to find the money to run the country because you won’t have a rush of people wanting to lend you more.

Tax system

Reforming the tax system for most people means that they should pay less and others more. Most of the tax proposals from the left rely on the 5 per cent of households earning over €100,000 per annum paying a lot more. This appears pleasant to the other 95 per cent, but remember this group of just 130,000 households is already paying half of all income tax.

What has worked for our economy over the past few years is the grind of meeting our budget targets and building international confidence. This is allowing us to raise borrowings cheaply and has attracted huge flows of investment. These are vital to maintaining growth.

It may make sense to be socialists in Europe – arguing for loose money, more public investment and pooling of sovereign debt burdens – but at home conservatism is paying off in vital areas. However, voters are still not persuaded that this route can “deliver” for them and their families.

On most measures the economy is in a much better place now than would have been expected as we ploughed through the worst of the recession. But the feelgood factor – which is meant to come with economic recovery – is still missing, and the political consequences of this are only starting to play themselves out.