AGORA Economic Conference 4th Athens Biennale 2013 12/10/13

1. The Great Recession:
An Irish Perspective
Frances Ruane
Athens Biennale, October 12, 2013

2. Society and the Great Recession..






Return to more sombre times in Ireland BUT
Seamus Heaney (2009) said that people do not
live by economics alone: “if poetry and the arts
can do anything, they can fortify your inner
life, your inwardness”
Creativity in all domains has strengthened
Feeding into theatre, film, art, novels and poetry
Feeding into new businesses and new ideas
2
But there have been great costs ...

3. Key Features of the Irish Economy


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


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
Strong multinationals in high-growth sectors
Services are really important
Strong domestic food sector
Significant tourism BUT
High wage costs and high prices
Strong vested interests (e.g. Professions)
Pub Sector efficiency needs to increase
Troika has been important
3

4. Impact of the Great Recession
Growth
Unemployment
Migration
Public Finances
Poverty and Equality
Government response required austerity plus solidarity
4

5. Irish Real GDP Growth 1948 – 2012
14
12
10
8
6
4
2
0
-2
-4
-6
-8
1949
1954
1959
1964
1969
1974
1979
1984
GDP Growth rate
1989
1994
1999
2004
2009
5

6. Irish Growth Performance in Context
% change
Ireland
Spain
Portugal
Greece

7. Employment and Unemployment Rates (%)
2000 - 2012
%
Employment rate
Unemployment rate
%

8. Net Migration, Immigration and Emigration
200
Thousands
150
100
50
0
-50
-100
-150
1987
1992
Emigration
1997
Immigration
2002
2007
Net Migration
2012

9. Public Finances – Debt to GDP Ratio
140
120
100
80
60
40
20
0
1995
1997
1999
2001
2003
2005
Debt as a percentage of GDP
2007
2009
2011
9

10. Poverty, Deprivation & Inequality rates
%
%
Gini coefficient
At Risk of Poverty
Deprivation
Consistent Poverty

11. Budget 2009
0.0
-1.0
1
2
3
4
5
6
7
8
9
10
-2.0
Income distribution
effects of First
Austerity Budget
supported Solidarity
-3.0
-4.0
-5.0
-6.0
-7.0
-8.0
-9.0
Budgets 2009 to 2013
0.0
Income Distribution
Effects of Cumulative
Austerity
Budgets
-2.0
1
2
3
4
5
6
7
8
9
10
-4.0
-6.0
-8.0
-10.0
-12.0
-14.0
Percentage changes in income by Decile
11

12. Distributive impact on Households containing
an elderly person Vs with a child
Budgets 2009-2012
WHY?

13. The Grey Protest, September 2008
13

14. Ireland’s Future Growth Prospects
 EU
stability/performance is crucial
 Growth depends mostly on exports
 EU-27/US are our major markets
 Can Ireland recover?
 Confidence is crucial for growth
 Uncertainty abounds ..
14

15. GDP Growth
6.0%
5.0%
WORLD
4.0%
3.0%
2.0%
1.0%
0.0%
1980
-1.0%
1985
1990
1995
2000
2005
2010
2015
2020
Global Growth potential but ...
15

16. GDP Growth
8.0%
6.0%
WORLD
4.0%
US
2.0%
EU
0.0%
1980
1985
1990
1995
2000
2005
2010
2015
2020
-2.0%
-4.0%
Lower in our key markets
-6.0%
16

17. GDP Growth
16.0%
14.0%
12.0%
10.0%
CHINA
8.0%
6.0%
4.0%
WORLD
2.0%
0.0%
1980
1985
1990
1995
2000
2005
2010
2015
2020
-2.0%
=> Higher growth means entering new markets
17

18. Ireland’s Growth Prospects: Scenarios

Recovery scenario
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Delayed Adjustment scenario
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Recovery in the EU
National macro strategies work out
EU recovery
Domestic recovery delayed (policy failure)
Stagnation scenario


EU stagnation
National macro strategies cannot work
ESRI Medium Term Review 2013

19. GNP
180000
170000
160000
150000
140000
130000
120000
110000
100000
2000
2005
Recovery
2010
Stagnation
2015
Delayed Adjustment
2020

20. Debt / GNP Ratio
170
160
150
140
130
120
110
100
90
80
2010
2012
Recovery
2014
Stagnation
2016
2018
Delayed Adjustment
2020

21. Unemployment Rate
16
14
% of Labour Force
12
10
8
6
4
2
0
2010
2012
Recovery
2014
Stagnation
2016
2018
Delayed Adjustment
2020

22. Public Finances – Current Debate


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Balance between expenditure and taxation –
has been 2:1 formula throughout
Approach: Deliver on agreement with Troika
Current Options :
1: Cut by €3.1bn – as per Troika Agreement (
2: Take benefit of increased recent
performance and cut by less the €3.1bn
Government and Troika: €2.5 bn
Solidarity Focus

23. Trade Union March, 2012
23

24. Economic Overview
Austerity approach has been painful
 Social Response has been relatively muted ..
 Distribution effects have helped solidarity
 Delivery on promises rewarded by market
 BUT
 Many old legacy issues not yet tackled
 New legacy issues will need to be sorted
 Looking forward


25. Looking Forward..
Creativity
Transformation
Flexibility
Innovation
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