As an extremely open economy, there was no possibility that Ireland would remain insulated from international trends. The collapse of the dot.com industry at the turn of the year presaged a global downturn. As far back as February, unemployment figures were beginning to nudge upwards. And, just as growth of the so-called Celtic Tiger was spread unevenly throughout the State, so the rash of recent closures and redundancies has been concentrated outside of the Dublin region, with Munster suffering most. Live Register figures for October show that unemployment has risen by 9,100 in eight months, seasonally adjusted. And while the Live Register does not accurately reflect employment trends, the standardised unemployment rate has risen to 3.9 per cent by the end of October. The change will add an extra €427 million to social welfare costs.
The better-than-expected Exchequer returns for October should not be allowed to disguise a continuing contraction of the economy. Income tax growth is flattening out and there may be a drop of about €2billion in projected revenue for the Government. These are difficult times. And tough decisions will be required.
However, the last thing we need is panic and declarations of crisis. We have to prepare for the inevitable economic upturn by modernising our transport system, putting in broadband telecommunications capacity and improving power supplies to the regions. We also need to moderate pay increases, at all levels, so as to retain competitiveness. A recent survey by the Paris-based Organisation for Economic Co-operation and Development ranked Ireland fourth amongst the countries of the world most likely to succeed in "knowledge" industries. And we topped a United States list of "emerging economies" most attractive to outside investors, because of our ability to develop in a balanced way. Our economic performance is still regarded with envy by much of the world.
We must be careful not to belittle those hard-won achievements or talk ourselves into a recession.