Cleaning up our act with EU help has got us out of PIGS sty for now

BUSINESS OPINION:Our escape from the swine pen merits at least half a pat on the national back, writes JOHN McMANUS

IS IT time for a national pat on the back? The most interesting thing, from the Irish perspective, about the current wave of negative sentiment about Greece, Portugal and Spain is that we are not being lumped in with them.

Have we escaped the less than flattering PIGS – Portugal, Ireland, Greece and Spain – monicker for the euro-zone countries with problems big enough to derail the entire project?

There certainly has been some sort of change in attitude to Ireland. Although there is no shortage of commentators predicting the demise of the euro zone, the number who cite Ireland as one of the reasons is diminishing.

One who stands out most in this regard is Paul Roubini – the New York university professor whose anticipation of the global financial crisis earned him the nickname Dr Doom – is now drawing a distinction between us and our fellow swine in his characteristically pessimistic musings on the future of the euro zone.

The reason for our exclusion appears to be that we have delivered on the first part of our four-part plan to return the national finances to good order, as defined by the EU deficit limit of 3 per cent.

The acid test of this was last December’s budget and we are now reaping the benefit. We have demonstrated to that all powerful creature – the bond market – that we are serious about sorting ourselves out, that we know how to do it and most importantly we have the will to do it.

The problem for our fellow PIGS is that they are at stage one of this process and as is the case with anyone or any country that has mucked things up on a grand scale, it is hard to believe them when they promise to fix it.

This was essentially the position Ireland was in 12 months ago. What we have done since then has gone a long way to proving that we can fix things.

Our new-found status as recovering PIG is pleasing – and a fillip for our rather battered national self-esteem – but it’s important not to get carried away given the size of the economic mountain we still have to climb.

The first point is that announcing a harsh Budget is the easy bit. Actually implementing it over the following 12 months is the hard task. And the bit that seemed to really resonate internationally – the decision to cut public sector and civil servant wages – is the hardest of all.

It is difficult to really gauge the true mood of the civil and public sector workers – as against their union representatives – but it would be foolish in the extreme to assume that they accept that our partial rehabilitation in the eyes of the bond markets is worth the pain they and their families are going through.

Hopefully they do, because there seems to be no escaping the fact that a government’s ability to cut the pay of its employees has become some sort of yardstick both of its own determination and also the wider national appetite for fiscal rectitude.

If you read anything of the Greek government’s plan to reduce its deficit to acceptable limits, the part most likely to give you cause to raise your eyebrow is the plan to cut its wage bill. And by the same token if they manage to do it, then confidence in Greece will revive.

The other reason for not getting carried away with ourselves is that it’s not really clear how much of our new-found resolve we can really take credit for.

Greece is effectively having its economic policy publicly dictated to it by the larger euro-zone states, primarily Germany and France. One suspects that the only difference 12 months ago was that they were dictating to us in private; most likely because of the impending Lisbon referendum.

There is a very strong correlation – one suspects – between the crucial support voiced for Ireland by Germany and the EU last spring and the tough emergency budget, which also announced the National Asset Management Agency.

Equally, the wobble on the eve of the last Budget about cutting civil servant pay appeared to be corrected shortly after the Minister for Finance met his peers at the monthly euro group.

Perhaps half a pat on the national back is in order then. But the real positive in all this is that if the euro zone can make or help (depending on your perspective) Ireland sort itself out, then the same is possible for Greece and also Spain and Portugal.