Ireland 1 – Formerly mighty Blighty 0

Hot on the heals of a Henry McDonald article proclaiming the south to be

a country on the edge of bankruptcy and a people seething with anger over the greed and profligacy of the nation’s political and financial elite.

Marc Coleman dons the cudgels for Ireland and counters that Ireland is on a path to real recovery, while the timing of the British election has meant that the UK economy has become a fools paradise with hard decisions delayed.

Whether they keep their jobs or not, some UK politicians may have to eat their words after Britain’s general election of May 6. And if they stay in government, they may wish they hadn’t.

Unlike Ireland, Britain has failed to grasp the nettle of fiscal correction, postponing the day of reckoning and making sure that day will be much worse than had timely action been taken.

Much like Liam Halligan’s earlier article in The Telegraph, covered on Slugger here, Coleman’s article goes very much against the grain. Only time will tell which view – if any – is right. Both states must overcome major challenges if they are to avoid the fate of late nineties early naughties Argentina.

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  • Framer

    Coleman is spot-on regarding the hard measures Ireland has taken although the property boom was so gross that it will take much longer to get over than he suggests.

    The UK will hit the buffers shortly no matter who takes charge. There is no realism apparent here with people looking for a new Tony Blair in Clegg!

    Gross devaluation of sterling is at least an option to reduce the debt problems which euro states don’t have.

    But would you buy UK debt when the parties are squabbling over £12b of cuts while borrowing £163b this year?

  • Argentina benefited greatly from sticking their fingers up to the IMF, defaulting, then working their own way out of their problems.

  • Mack

    Dave –

    Their economy rebounded strongly after breaking the peg with the dollar and defaulting on their debt. The whole episode (from 99 onwards) was still extra-ordinarily painful, and even as recently as 2008 the government expropriated private pensions to improve their fiscal position..

  • Mack

    Argentina benefited greatly from sticking their fingers up to the IMF

    You have to ask the IMF for help by the way – they aren’t some supra-national authority..

  • John Joe

    Coleman’s analysis might not even go far enough. Sterling is already grossly devalued vis-a-vis the euro. Flooding the market with cheap money is, in effect, creating a mini version of the post 9/11 scenario when cheap money was made widely available to stimulate economic development. This came home to roost with the credit crisis. The UK escape route of more cheap credit and the expected exports generated by a low value sterling won’t have been enough with low consumer confidence in the eurozone (and thus poor import levels even despite the good exchange on sterling). If the exchange rate of sterling was driven up back to its previous value (to 2007) of above 1.40 euro that it had held for 5-6 years, this would suggest sterling is over-valued by up to 20%. There may be an aftershock on the way for the UK economy when this comes home to roost since the election has got in the way of unpopular solutions.