Latest figures from the CSO (Central Statistics Office) indicate that Ireland has emerged from its recession, but try telling that to thousands of debt stricken households that are about to be hit with a new tranche of income sapping taxes.
According to estimates by the CSO (Central Statistics Office), gross domestic product increased in the three months to June by 0.4%, compared to a fall of 0.6% in the first three months of the year. It’s thought that the rise has been fueled by rising exports (up 4.3%) and consumer spending (up 0.7%). However, capital investment fell 3.4% and government spending was also down 1.3%.
The realities of Ireland’s recession
Nevertheless, what this all means is, on paper, Ireland is out of recession. But just how long will that last, given the effects of austerity on the economy, the Irish people and consumer confidence? A number of reports out this week paint an ugly picture of the effects of the government’s austerity plans.
According to one survey, two-thirds of Irish families say the recession has been ‘financially crippling’, while another shows one in six behind with utilities bills and one in eleven in arrears with mortgage/rent. A study from the Irish League of Credit Unions suggests that more than half of all Irish adults have less than €100 disposable income after their regular monthly household bills and taxes are paid.
Ireland’s housing issues
To add further misery to the statistics, the Simon Community claims that the number of people sleeping rough on the streets of Dublin has soared 88% since last year. Sam McGuinness from the homeless charity said that the pressures of recession combined with government cuts were to blame. “The need for accommodation and assistance for those with nowhere to go, and whose existence has become harsh and dangerous, is the highest we’ve ever seen. In present uncertain times, with limited emergency accommodation, housing shortage, rent increases and rent allowance restrictions, the pressure for beds is frantic.”
The charity is expecting cuts to its own funding in the coming budget.
No let-up in sight for Ireland
All this in the same week that the Minister of Finance, Michael Noonan, has warned that next month’s budget won’t be any easier than last year’s. He said the figures were in line with expectations, although he clearly welcomed the news from the CSO: “There’s no reason to be throwing our hats in the air or anything like that. I suppose what comes from the figures is that the country is out of recession. There’s modest growth and taking that in association with the employment figures we had from the same time of year, jobs are being created now at about 650 jobs a week. So it’s moving in the right direction. What we have to do now is secure our exit from the programme so we must stabilize our growth and continue to grow.”
The Minister for Health, James Reilly, was curiously upbeat, playing down massive cuts to services and job losses, saying the economy “continues to recover and that is great news for the government. Health played its part. We took €3 billion in real terms out of our budget, which is nearly 20%. We had nearly a 10% reduction in staff.”
As for the budget, he said, “I think this budget is going to be tough, as the Taoiseach said, no matter what way we go at it. But I hope and I believe it’s the last of the really tough budgets and the country can now look to a much brighter future.”
Breaking point for Ireland’s Fine Gael/Labour
He suggested that there might be some little things in the budget for those hardest hit, but that will be little consolation for Irish taxpayers with the full local property tax set to come into effect on 1st January 2014 (property owners paid just half in 2013). The water tax will appear a year later and could be the straw that breaks the camel’s back for the Fine Gael/Labour alliance. There are already rumblings in the rankings with labour pressing their Fine Gael cohorts for a budget adjustment below the €3.1 billion the Troika wants to see.
Ireland might be on track to become the first country to exit a bailout since the European crisis, but at what cost? It’s difficult to see what more the state can squeeze out of the public in order to secure the €3.1 billion in cuts demanded by the Troika. Halfway through their electoral term, the government will have seriously think about who it wants to please most – the Troika or the Irish people.