Ex-Bush adviser predicts 20-year economic slump for Ireland

Dr Pippa Malmgren says State should mull leaving euro and devaluing punt

Dr Pippa Malmgren, who was an economic adviser to George W Bush when he was US president, says Ireland faces 20 years of "no growth" because the European Central Bank is unable to stoke inflation to help ease the country's debt woes.

Dr Malmgren, who was in Dublin yesterday to speak at a conference organised by Davy Stockbrokers, also said the country should consider leaving the euro and devaluing the punt.

She said Ireland could deal with its debts through austerity without inflating them away: “But you have to accept 20 years of no growth. That’s the only other option. It’s what European policymakers expect Ireland to do. The question is, do the Irish people have the tolerance to take that much pain?”

She said inflation was already starting to creep up in Germany, most notably through basic food items such as potatoes and UHT milk. She said this will eventually force the ECB to act to keep inflation under control.


“Germany doesn’t want inflation. Everybody else needs it, that’s the heart of the problem,” she said, warning that inflation cannot be properly controlled once it begins to spiral.

Dr Malmgren also believes that a country, possibly Cyrpus, will exit the euro zone: “If a country can leave and devalue, it raises the question for Ireland - what is the cost of staying in?”

Mark Paul

Mark Paul

Mark Paul is London Correspondent for The Irish Times