Insolvency reforms are little help to Generation Debt

We have all by now become resigned to the fact that there will be a two-speed recovery: faster for those involved in the export-orientated parts of the economy and slower for those in the domestic economy.

What we now have to get out heads around is the notion of an intergenerational recovery as outlined in this week’s figures from the CSO on household debt. As Dermot O’Leary of Goodbody puts it, “there is a group of families with heads of households aged between 35 and 44, who bought in the boom in the commuter counties, which have significant debt issues.” They are counterbalanced by “a group with significant net wealth [in older age cohorts], but also a younger generation that did not get involved in the debt explosion of the 2000s”.

O’Leary does not say it, but it does rather look like this squeezed middle must stumble on in debt limbo until money trickles down to them via inheritance from the older cohort or their kids make enough money to help them out. We don’t know how many of them there are but we can surmise there are plenty of them and they are plenty angry. They are also likely to vote – and not for the Government parties.

Could this explain the Government's attempt to reboot the insolvency regime and Joan Burton's floating – at the Chartered Accountants Ireland dinner this week – of the notion of reducing the bankruptcy period from three years to one? Perhaps, but bankruptcy is not the solution to the squeezed middle's problems. They require debt relief and thus the Tánaiste's reference to the banks having "more than ample provisions to allow them to act now" is a more likely portent of future action.