Are politicians chasing a poisoned chalice prize: electoral victory only to preside over an unavoidable recession? Michael Caseybelieves so.
If the economy weakens during the next five years, a new government could be severely punished by an electorate that has come to expect very high living standards. A new government would be blamed by voters who would hark back to the good old days of the Celtic Tiger, which they would attribute to the Fianna Fáil-led coalition. Whether such attribution would be warranted or not is beside the point.
There is a significant probability that the Irish economy will slow to a European-style growth rate of about 2 per cent or less for a couple of years during the term of the next government. It is unlikely that growth of this sort will prevent the unemployment rate from increasing - possibly to 6 or 7 per cent.
It is unlikely that any government - of whatever complexion - will be able to do anything to prevent such a recession. If a new government has to preside over such a relatively poor economic performance, it is likely to suffer electoral damage for a very long time to come. The prize to be won at this election could well be a poisoned chalice.
There are two historical reasons why such an economic slow-down seems probable. First, the Celtic Tiger and subsequent years constituted Ireland's "catch-up" period. There is, however, no evidence internationally that a country, having caught up on its peers, can then move ahead of them in a sustained way.
Theory would suggest that what is far more likely to happen is that the country would revert to the growth path of the peer countries - about 2 per cent in Ireland's case.
The second reason is that even if Ireland's potential growth rate is as high as 4-5 per cent, it must be remembered that this is basically a long-term average. Since we have been growing over the past 15 years by well in excess of this, it follows that the growth rate must fall for a considerable period to well below the average of 4-5 per cent.
Other less theoretical reasons for expecting a slow-down can be divided into two groups: those that were latent even in the boom years of the Celtic Tiger and those that emerged during the past five years.
In the earlier period, say the 1990s as a whole, it became apparent by looking behind the headline figures that there were serious problems beginning to emerge in relation to loss of competitiveness and unsustainable rises in property prices. Towards the end of that period, the rise in the value of the euro was singularly unhelpful to Irish exports to non-European countries. The lack of preparedness of the public sector to cope with huge infrastructural demands, and the inevitable mistakes, levied serious costs on the economy.
Sub-optimal investment caused in part by excessively low interest rates was an additional problem, the effects of which were bound to surface at some stage. In most years fiscal policy was not properly geared to the macro needs of the economy.
Our inflation rate rose by twice the European average - this was clearly unsustainable.
Over-reliance on foreign direct investment was a vulnerability, made more risky by the non-stop escalation of wage and other costs, the fall-off in science students, and the vigorous competition coming from lower-cost countries.
None of these risks and vulnerabilities has gone away. Indeed a number of them, such as competitiveness and the property market bubble, have become much more serious. But in addition we now have newly emerging problems - those that have become apparent over the past five years.
First, foreign direct investment has slowed down. The effects of this have not yet come through into lower growth. This is because of lags in the system but also because of buoyant consumer spending and construction activity. While consumer spending may continue to be strong for some time because of SSIAs, it must surely moderate in a year or two. This is because of the extremely high level of consumer debt and probably also because of a negative wealth effect as property prices fall in real terms.
It also seems clear that the frenetic construction activity must slow down sooner rather than later. Maybe the planned increase in public investment will absorb some of the resources released from house-building, but it does not seem as if this will be adequate. Apart from technical reasons, the cost base of domestic building firms is now very high, with the result that much of our infrastructure will have to be farmed out to cheaper foreign contractors. It is unlikely that expenditure for infrastructure can be as high as planned because much greater care will have to be taken to avoid mistakes.
The final problem which has come to light in the past few years is the surprising and largely unexplained slow-down in productivity growth. It is a worrying development, bad in itself and also because it casts doubt on the extent to which Ireland Inc has transformed itself into a knowledge economy.
It is hard to avoid the impression that the economy will run out of steam in a couple of years and there is little that any government will be able to do to offset it. We may get lucky again if foreign direct investment picks up but there is now much more competition for this sort of investment.
On the demand side we don't have control of interest rates or the exchange rate. We can't count on fiscal policy if only because of the apparent inability to estimate revenue. Social partnership will not provide any solutions and may become more fraught - recent pay claims by nurses and teachers do not bode well. And the stand-off regarding medical consultants' contracts is positively dangerous.
Even if a new government were able to come up with some good ideas, it is unlikely that it would be able to implement them in time. This is because the vast majority of decision-makers in the public sector - all 800 different public bodies - have been appointed by the present Government and will act as a drag anchor on any fresh initiatives.
A related difficulty facing any new government will be an inability to deliver on the foolhardy promises already made, as a weaker economy will not generate nearly enough revenue. Thus, the economy could prove to be a huge banana skin.
The economy has been on a virtuous circle for several years. These circles don't just lose momentum - they have a nasty habit of turning into vicious circles.
One of the crucial factors is confidence. If this is lost - by producers, consumers, investors - then the medium-term prospects for the economy could be bleak. We have had great success over 15 years; few have looked at the deeper parameters behind the headline figures. Despite all the promises, no one has thought of the critical issue: Plan B.
• Michael Casey is a former chief economist of the Central Bank and board member of the International Monetary Fund