It's party time again?
Posted on August 08, 2014 by Tom Healy
News of rising house prices, fewer households in negative equity, falling dole queues, rising spending in the shops and the long farewell to the Troika together with a relatively benign Irish summer, so far, have lifted the economic mood a little in the Republic of Ireland. In the North the spillover from improvements in the UK wide economy are being felt. A sign that conditions are improving is when economic forecasters (among whom NERI is now counted) are ‘upgrading’ their projections of employment, output or public finances from Quarter to Quarter.
At least the terrible sense of gloom, uncertainty and shock that pervaded the economic landscape in 2009-2011 has abated considerably. Not knowing whether you had a job this time in six months or what wage you would earn and how you would cope with rising bills and charges was (and still is) a major worry for workers and their families. While conditions have improved, living standards have not as rising charges take their toll. Wages are rising a little, on average, just enough to meet the rising cost of goods and services. However, continuing austerity measures via water and local property charges are continuing to reduce the average, real disposable income of households. Add to this the gathering crisis in housing and accommodation (should anyone be surprised that there is a crisis because public capital investment in social housing was almost abolished after a succession of austerity budgets?).
Retail Sales (2005 - 2014)
In summary things are not are gloomy as they were. There is a break in the clouds and there is an indication of ‘giving way to sunny spells later on with scattered showers in places’ (a phrase familiar to listeners to Irish weather forecasts). Some large nasty weather fronts are gathering in parts of Europe and elsewhere with uncertain impacts on Irish investment and trade.
When you hear commentators in the Republic of Ireland asking not ‘Should we have tax cuts’ but ‘is it too early for tax cuts now?’ (the ‘self-evident truth’ being, of course, that taxes are far too high for everyone especially oneself) you can guess that one of two things is about to happen based on experience of the last 4 decades:
- A general election is imminent; and/or
- Nothing has been learned from the past 4 decades.
Either way, the challenge is how to build on the weak and fragile economic recovery – such as it is – and continue to reduce unemployment and low pay as well as engage in an emergency programme of public investment in affordable good-quality homes for individuals and families. More than that the challenge is to figure out what sort of Ireland we think is possible in 2030.
2030 because it takes one generation (and probably two) and 5 electoral cycles to bring about a fundamental shift in political and social culture.
Courageous, creative and realistic thinking is needed about framing a vision for Irish society. Political economy has a vital role to play in helping shape such a vision about where we need to go. This will be top of the NERI research agenda as we commence a new research year 2014/15.
For now enjoy the August sunshine wherever you are!