Ireland looks like being hit harder than the UK

While Gordon Brown and the British economy are far from out of the woods yet, there’s a striking difference between the cautiously favourable comment on the British bank rescue and the previews of tomorrow’s Irish budget. Searing criticism of the Ahern and Cowen regimes pours out of the industry website Finfacts which rounds in the government for years of improvidence.

“The results of political failure will be thousands of damaged and destroyed lives while in or out of office, the political masters will remain in clover”.

The latest Davy forecasts are grim:

“The decline in construction activity will continue. House completions will slip to 25,000 from 50,000 in 2008.

The unemployment rate may reach 8.5% by the end of 2009.” (6% forecast for the UK)

In the budget preview

“.. a country that is more dependent on US inward investment than any other (90% of exports are made by foreign firms) cannot afford to embed the impression that the once lauded Celtic Tiger economy, is out of control.”

The Irish Times reveal the extent of public fear. “Nearly 80 per cent of employees have said they fear that their jobs are not safe in the current economic climate.”
Forecast are immediate spending cuts cuts in tomorrow’s budget – (watch how these may affect NI projects and political sweeteners) and income tax rises that take the Republic’s income tax to higher levels than than the UK’s, at least for the time being, until the projections in next month’s UK pre-budget report. “Speculation focused on an income levy of 1 per cent, with a possible 2 per cent for high earners, rather than an increase in the top tax rate of 41 per cent. An income levy would bite deeper into taxpayers’ pockets and bring in more revenue than an increase in the rate. Any levy would come on top of the 2 per cent health levy currently in place.”

Good news, sort of.. “As a consequence of lower consumption, good news, sort of “Inflation will decline to 1%”

The EU Commission has approved the Irish Bank guarantee scheme (Seems like old news already; and what choice had they?)

And good to see that our dear old Ulster Bank is sheltering under the protection of Her Majesty’s Treasury.

We’re in the eye of the storm at the moment and pressures may settle down in a month or two. Right now though, the extent of the crisis has wide if as yet unknown implications for Irish politics, relations with Europe and Irish prosperity and optimism.