There seems to be an economic recovery happening in Ireland with all forecasters vying to give a more upbeat update on whither the Irish economy. However, at ISME we do remember that the same forecasting bodies have been wrong and very wrong in the not too distant past.
Looking further afield to both Germany and France, news today that their economies are spluttering and that they may need further TLC in the form of even easier monetary policies (the near 0% interest rate doesn’t seem to be having the desired effect). This could be bad news again for Ireland. Unlike some commentators we at ISME realise that our economy, with a population of roughly 1% of the European total, is wholly insignificant to the ECB and Brussels economic planners.
Part of the downfall of the Irish economy in 2008 was that European interest rates did not reflect what was needed to quench the raging banker fuelled economy here during the height of the Celtic Tiger madness. This time, and we are giving an early warning, could be a case where Ireland may have the fastest growing economy in Europe next year, while Germany and France falter. And what is likely to happen? You can bet that the German and French economies will be looked after by the Euro planners, while we in Ireland will be given the wrong economic medicine, again.
However, there is one caveat to all of this. As the price of beef is irrelevant to a vegetarian, so interest rates going up or down are meaningless in an economy, where credit is not available. The signs from our government would suggest that they are about to pump the property sector again – a populist move, while again and again, the SME sector, employing the bulk of productive workers in the economy, still sits waiting for any sign of bank credit, the lifeblood of business.
SME’s caught in the crossfire, again.
No sustainable recovery will be made unless our SME’s have access to credit so they can start rebuilding and planning for the future. But as usual it looks like the big boys, big economies and big business, are going to get it their way again. Is there no economic intelligence amongst all the analysts?