Insight: Pioneer Ireland fears austerity was in vain | Reuters

Reuters – Returning from an annual European trade show last month on a flight packed with successful Irish retailers, Ian Martin felt his country’s battered economy might finally be turning around.

A supplier of first aid and hygiene products to Irish companies, Martin has spent the last four years trimming costs, laying off some staff and cutting the hours of other employees.

Ireland’s government has been doing the same, making inroads into an enormous budget deficit and recapitalizing a near-collapsed banking system. The policies have been painful – the Irish consume 12 percent less than they did in 2007 – but Dublin has won praise around Europe for acting hard and fast.

Unfortunately, it may not matter. The political crisis in Greece and banking woes in Spain now threaten to end the modest Irish recovery spotted by Martin on last month’s flight.

“I think if there is a major crisis, people will literally stop spending money. That little bit of confidence that was coming back will be gone,” said Martin, who employs 20 people in three cities.

“It is the last thing we need, we have done as we’re told and we’re still not really coming out of it. It would really just be a further nail in the coffin.”

Martin is not the only one in Ireland watching developments in Greece and Spain with horror.

Ireland’s government oversaw a return to mild economic growth last year but it is quickly learning that its own policies alone will not fix Ireland’s debt pile, which will peak at 120 percent of GDP next year.

The country desperately needs two things: a stronger global economy so its exporters can begin selling more stuff, and a normalization of sovereign debt markets so Dublin can begin borrowing again and exit its international bailout on schedule next year.

Neither appear likely.

via Insight: Pioneer Ireland fears austerity was in vain | Reuters

Strange Random Ireland Quote:

“In Ireland the inevitable never happens and the unexpected constantly occurs.” – Sir John Pentland Mahaffy

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Posted on May 29, 2012, in Article and tagged , , , , , , , , , . Bookmark the permalink. Leave a comment.

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