Reflections on an economic revolution

The temptation, on leaving the business and finance section of this newspaper after 12 years, is to look back. To consider the extraordinary transformation of the economy from Europe's basket case to its star performer.

To wonder when exactly it was that we all realised we were in the middle of an economic boom (sometime in the middle of 1998, I reckon, but take your pick).

Or to consider the contrast between the dog days of the mid to late 1980s and the extraordinary entrepreneurial revolution which has taken hold in the economy, now most evident in the high-tech sector.

But for newspapers, looking back is boring. The business is about reporting the present - and trying to make a stab at the future. Past events can, however, help to put current developments in perspective and provide some clues about how things might turn out.

Market history shows, for example, that what goes down must come up and vice-versa. We can fairly say that in the not too distant future some people will make a lot of money from buying euros, from selling Internet stocks and from going short on the US stock market.

A few might even make a few bob from Irish bank shares. The trick would be to forecast when these things might happen. And if I could do that, of course, I wouldn't be telling you all.

For financial journalists, standing back and trying to take an objective view on current trends is difficult, as we deal with a volume of business news which has expanded as quickly as the economy itself over the past dozen years or so.

But here are some hostages to fortune, in the certain hope that by tomorrow this paper will be wrapping a "cod and large".

There will be an almighty clear-out among all the bright young companies in the dot com goldrush. The valuations of many of these companies are now farcical; some will make a lot of money as the Net revolution sweeps through our lives, but many others will fail, leaving investors badly shaken.

Some companies will just not make it, while others will eventually be seen to have been promoted by the snake-oil salesmen who profit from every bandwagon.

The US and international stock markets are set for a nasty judder. The US economy has built up a head of steam, consumer borrowing has soared and the market has just gone up and up. Many of these dealing - and investing - have never experienced a real bear market. They might, and soon enough.

By the end of this year, the euro will have recovered significantly from its current lows as the main European economies hit the recovery trail.

And what of our own Celtic Tiger? There are now obvious danger signals in higher inflation, soaring house prices, labour shortages and congestion But it is still difficult to see what could bring it all crashing to a halt.

Interest rates will rise over the next year or so, but not spectacularly. So what other "shock" could hit us? Perhaps a severe economic downturn led by a US market fall and affecting many of the multinationals here? Or a major shake-out in the high-tech sector? Possible, but unlikely.

Growth will slow, but such is the dynamism of the economy that with a fair international wind the short-term outlook remains reasonably bright.

The thing to look out for, though, is that we do not start to lose our competitive edge and our position as a highly productive economy which, in a single currency area, could quickly turn an outperforming economy into a struggler.

A slow downturn triggered by such a development is, I believe, a bigger risk than a sudden crash.

And one last one. It is that the economic agenda of lower taxes which has dominated recent elections will not be the main issue in the next one.

Instead, the key issue will be who will best manage the economy and use the wealth provided to improve public services for all. Better healthcare, cheaper housing and improved education are now bigger issues for most people than how many percentage points will come off the top tax rate.