Sir, – Your editorial “Deal will prolong fiscal crisis in US” (August 4th) argues: “The US badly needs a major programme of infrastructure spending, which could address employment effectively.” The very same case can and should be made for Ireland.
The experience of the 1980s in Ireland clearly shows excessive reductions in capital investments both delay economic recovery and leave an increased legacy of poor-condition assets for future generations, with all the economic, social and environment problems that this brings. Despite this first-hand experience, however, the policy since the onset of the economic downturn has been to favour unsustainable day-to-day spending over productive investments in education, health, transport, telecommunications, energy and water.
Such investments are crucial for the country’s future growth and employment prospects and would provide a substantive boost to the domestic economy, which in turn would help to support employment, grow Government revenues and restore confidence.
Private investment in the domestic economy, meanwhile, remains severely undermined by the continued failure of the banks to lend to local businesses, consumers and prospective house buyers. The case in the housing market provides stark illustration; ours must be the only market in the developed world where only cash buyers need apply. Despite this, AIB’s David Hodgkinson recently commented that the banks are open for business and willing to lend. Their challenge, he says, lies in convincing the public of this fact. Mr Hodgkinson’s assertions do not tally with what businesses and individuals are saying, so clearly there is a major breakdown somewhere. The Government has to intervene to get to the bottom of this and come up with a credible plan to resolve the shortage of credit in the economy. – Yours, etc,