Government will only be able to blame predecessor 'for the next nine months'

ECONOMIC CONFERENCE:THE GOVERNMENT will only be able to keep blaming the State's economic troubles on its predecessor for a short period, according to Prof John FitzGerald of the Economic and Social Research Institute.

“You have one shot to get it right – after that the electorate will blame you . . . the Irish Government can blame everything on the outgoing government for the next nine months, but after that it’s their fault,” he told a conference at Pennsylvania’s Lehigh University that attracted experts from Ireland and the US under the title Whither the Irish economy?

He also cautioned against Ireland giving up major concessions in order to wring a lower interest rate on the funds provided by the EU under the programme for financial support. “It would be rather bizarre for the EU to have a lower interest rate for Greece, which is riskier than Ireland, and a lower rate for Portugal, which is about the same as Ireland, and not have that rate for Ireland,” said Prof FitzGerald.

“The best approach may be to sit back and wait until they give it to you.”

A similar point was made by another speaker at the conference, NUI Galway economics professor John McHale. He told The Irish Times that any concession on corporate tax would be “an incredibly bad bargain” even if an interest-rate reduction were obtained in return.

Prof FitzGerald argued that Ireland’s economy normally grew in tandem with an expansion of world demand and a downward movement of domestic wages. Both those trends could now be seen. “The issue for Ireland is: when will people actually go out and spend? It is domestic demand – in the pub, in a restaurant, when they buy a house – that creates jobs. When is this going to happen? That is what we are uncertain about.

“I think we are facing another year – probably two years – of difficult times. Beyond that, the odds are very much in favour of a recovery.”

Even as the assembled experts sought to look to the future, they inevitably proffered explanations and observations about Ireland’s recent economic past.

Gregory Connor, a professor of finance at NUI Maynooth, contended that the “fundamental problem” had been the lack of proper banking regulation.

“Eliminate that and Ireland would be just another European country having a soft recession.”