Madam, - The downturn in the economy was not unexpected, but our politicians seem to have been taken completely unawares. The root cause of our problem, besides external factors, is that our costs are too high, mainly because of property prices, which feed into the economy by way of high rents, and high service charges and more expensive goods in the shops.
Most of our recent budgets have used tax incentives to encourage investment in property, and the banks by imprudent lending have fuelled this fire.
The value of land in Ireland is completely out of touch with reality compared with our continental neighbours. The value of development land has to fall by approximately 40 per cent more to bring it into line with European levels, and houses by possibly 30 per cent. This will cause much pain, and it will put severe pressure on the liquidity of some of our banks. There is no easy fix, and a lot of people are going to get hurt. We need the courage and strength to dig ourselves out of this situation.
But it would be very foolish of the Government to try to underpin the big property developers and the banks.
They have made their own beds, now they should be allowed to lie in them. - Yours, etc,
THOMAS McDONOGH,
St. Paul's Road,
Galway.