Inside The World Of Business

Reports of recession’s death have been greatly exaggerated

BEST SIT down for this: the Irish economy is in recession, according to data published by the Central Statistics Office (CSO) this week. Yes, “hold the front page” is the appropriately sarcastic response to this little nugget – except it’s not quite as simple as that.

Because up until Thursday morning, the correct (as in the technically correct, nerdy table quiz correct) answer to the question “is the Irish economy in recession?” was no. The economy had officially started to grow again: it had, in hard statistical terms, pushed through the door marked exit and back into the light.

This is because last December, the CSO said the economy’s Gross Domestic Product (GDP) grew by 0.3 per cent in the third quarter of 2009 compared to the second.

Of course, interpreting this hesitantly positive number as an end to our troubles would have been greatly, and offensively, unconvincing to any one of the 267,400 people who were unemployed in the final quarter of 2009 – so there was no shouting in the streets about it, just Minister for Finance Brian Lenihan’s rather hopeful and much challenged Budget day assertion that the worst was over.

This week, however, the CSO published its fourth-quarter numbers showing that GDP was down 2.3 per cent compared to the previous quarter. Does that mean we have now entered into the so-called “double dip” recession so feared by Western politicians?

Actually, no, and this is where it gets a little hazy. On the release of its fourth quarter numbers, the CSO also revised its estimates for the previous quarters – a perfectly normal event.

In this case, though the change was within its usual margin of error, the revision had a symbolic significance: GDP had not actually grown by 0.3 per cent in the third quarter; rather it had fallen by 0.1 per cent.

There is no double dip, because we were never out of recession in the first place.

To make matters even more complicated, most Irish economists have little time for GDP anyway, despite it being the standard measure in other economies. Ireland’s wealth of foreign-owned multinationals means economists here favour the Gross National Product (GNP) metric, which excludes multinational profits and is therefore deemed a more accurate way of measuring the health of the Irish economy.

And there is no ambiguity about Ireland’s GNP. It’s down 2.3 per cent on a quarterly basis and fell 11.3 per cent in 2009. No revision is going to make that positive.

DDDA in the dock

THERE WAS little of surprise in the three draft reports into the activities of Dublin Docklands Development Authority (DDDA) published by Fine Gael this week. The reports simply exposed the scale of the mess that its new chairwoman Prof Niamh Brennan has to clean up.

The most telling revelation is the extent to which the State is on the hook over the Irish Glass Bottle Site – the taxpayer could ultimately be left with a €500 million bill for the project.

But any regular reader of court reports would have been well aware that practically all the major projects in the Docklands have been the subject of legal disputes. One wonders why Minister for the Environment John Gormley needed to commission three separate reports to tell him what happened at the DDDA?

Even more concerning is that while the whole project is proving to be a bonanza for lawyers and professional advisors, the benefits for the local community remain unclear.

The argument for giving the DDDA fast-track planning powers was to aid an area which, despite having the IFSC in its back yard, failed to benefit from the boom.

Rather than ensuring the success of urban regeneration in the Docklands, giving the DDDA the power both to promote development and approve it, created a conflict that was a ticking time bomb. We now have a body of evidence about what happened. Will the Government, or the public, stomach an expensive inquiry into why and how it happened?

Farewell, Fingleton’s PR man

IT WAS a relationship well known to many journalists and it is drawing to a close. PR man James Morrissey is parting from the Irish Nationwide Building Society after 15 years.

It is perhaps more accurate to say that Morrissey represented the building society’s veteran former chief executive Michael Fingleton first and then the building society.

Irish Nationwide secured favourable media coverage in the early years due to Fingleton’s generous disposition towards mortgage applications from members of the fourth estate. He also made himself readily available to the press.

However, the society’s failed attempt to secure a sale in 2007 and the financial crisis increased Morrissey’s workload immeasurably as he was regularly called upon to defend Irish Nationwide’s honour and solvency.

Morrissey, a former journalist, was recruited by Fingleton to represent the society after he applied to the lender for a mortgage.

He continued to represent Irish Nationwide following Fingleton’s ignominious departure last April. Both sides have since amicably agreed to part company and Morrissey is helping Irish Nationwide to identify his replacement. Not that Morrissey will be idle – he continues to represent Denis O’Brien, Philip Lynch of One51, developer Bernard McNamara, technology entrepreneur Bill McCabe and Riverdance’s John McColgan and Moya Doherty.

Podcast

You can listen to our weekly business podcast at www.irishtimes.com/business/podcast

Next Week

Nama moves centre-stage next week when the first tranche of loans starts to be transferred from the banks. Bank of Ireland will disclose the scale of the haircut imposed when it reports results on Tuesday, hours before Minister for Finance Brian Lenihan announces details of the recapitalisation programme.

Online

For regular commentary on business and economic issues visit our blog, Current Account, at www.irishtimes.com/blogs/business

Twitter users can receive links to the latest business news and blog posts by following us at

twitter.com/IrishTimesBiz