Turning the corner?

The contents of the Government’s medium term economic plan hardly justify the title “ A Strategy for Growth”. The aspiration to achieve the end – virtual full employment by 2020 based on average growth rates of 3 per cent of GDP over a seven-year-period – is commendable. But the means to attain these goals are far from clear, as the document fails to outline specific policy measures to ensure these ambitious growth targets can be achieved. The Government’s master plan remains short on detail and long on aspiration; clear about the Coalition’s successes in office, much less so about its specific policy intentions. The vagueness and lack of content in the 66-page document and its rather heroic growth assumptions will scarcely impress foreign investors, or reassure a sceptical public.

The National Recovery Plan (2011-2014) of the Fianna Fáil-led coalition formed the basis for the bailout agreement with the EU/IMF - which the Government inherited. That economic plan, predicated on a 2.7 per cent average growth rate over four years, has already proved far too optimistic. This again illustrates the hazards of economic forecasting at a time of much uncertainty.

A useful feature of the troika’s surveillance of the Irish economy during the bailout period, which should now be emulated, was how it held the Government to account. This was done through regular reviews of progress, later published. Programme targets set had to be met, implementation failure was quickly identified, and had to be explained.

But how will the public now measure the Government's success in implementing its own blueprint? By self-assessment, it would seem, rather than by more rigorous external scrutiny – such as expert bodies, like the Irish Fiscal Council, could provide. Instead it is proposed: "Government will monitor performance of relative plans and initiatives on an ongoing basis including through its cross-cutting mechanisms such as Cabinet committees."

The biggest problems facing the economy are most pressing: the banks, and their inability or unwillingness to lend; continuing high level of personal debt, reflecting large numbers in default on their mortgage repayments, and the unresolved financial difficulties of small and medium enterprises (SMEs), which employ some 70 per cent of private sector workers, but where 50 per cent of loans are in arrears.

On these issues, the Government’s plan has little new to say. However, some of the most tangible and encouraging signs of recovery are those identified by the Economic and Social Research Institute. In its latest report, the institute predicts a 60,000 rise in employment this year, and improvement in the public finances, as grounds for its confident – and hopefully prescient – claim that the “Irish economy has turned the corner”.