Cantillon: Robust growth in poetic analysis

Whatever about Seamus Heaney's hope and history rhyming, yesterday we had the employers' group chief, Danny McCoy, rhyming with President Micheal D Higgins in the austerity debate.

McCoy was quick to point out that while Ibec’s call on the Government not to levy an additional half a billion euros worth of taxes on an already weary nation was in tune, so to speak, with the President’s criticisms of the European response to the economic crisis, this was not the same as being against austerity.

Rather, Ibec’s view was an indicator of the progress Ireland has made because of austerity, McCoy said.

The stance of the employers' group doesn't seem to rhyme at all with that of the Fiscal Council, which believes that it would be no harm if Ireland was a bit ahead of its consolidation targets, given that there is always a possibility of an unexpected shock up ahead.

Yesterday McCoy said that while Ibec was in a general way in agreement with the council, policy needed to change when circumstances changed, and at the moment growth in the economy was pallid and the balance of advantage might lie in giving the economy a boost while remaining within the deficit targets. He added that if the council’s fears come to pass, it won’t be only Ireland that will have to face up to the new circumstances.

Key to the Irish situation, in McCoy’s view, is the wealth of households. While there is an understandable focus on the huge number of households that are struggling, the fact is that probably more than half of homeowners don’t have mortgages.

The employers’ group believes that if only those households with the capacity to do so would open the purse strings a bit more the conditions for business could see a significant improvement. Seen from this point of view, a decision by the Government to abandon its €500 milllion tax plan might create the right mood music for a bit more spending and a bit less saving (or paying down debt).

Nevertheless, it remains the case that Ireland is dependent on developments elsewhere if it is to experience a resurgence of growth. A bit more rhyming from Brussels, Frankfurt and Berlin will be needed before Irish economic history takes a turn for the better.