THE FACT OF THE MATTER
Okay, so the bad news is that the EU is about to enter recession as growth forecasts for 2023 are slashed due to prolonged inflation and the war in Ukraine. The EU Commission’s Autumn Economic Forecast projects GDP to fall this quarter with the contraction to continue in the first quarter of next year. Real GDP growth is to grow at just 0.3% in 2023, well below the 1.5% forecast in the summer.
The good news is the commission says Ireland will top the eurozone countries this year with 7.9% growth in GDP which, downside, they forecast will fall to 3.2% in 2023 and 3.1% in 2024 on the back of lower purchasing power and uncertainty weighing on investment.
The really good news is we, we Irish, will come through it all in the final analysis. I speak from experience. I came through the whole decade of the Eighties, a decade ridden with chronic recession. I married, took out a mortgage and helped raise three children on a single income. It was tough, very tough.
The decade of the 1980s was dominated politically by Ronald Reagan in the US and Mikhail Gorbachev in the Soviet Union. The defining moment of that decade was the collapse of the Soviet Union and of Communist rule in Eastern Europe. In 1989 thousands were killed in Tienanmen Square in Beijing, China, as students protested. The Iranian Revolution saw the start of Islamic Fundamentalism as a political force. The late 1980s saw apartheid in South Africa begin to dismantle after decades of international pressure.
The early 1980s saw a severe economic recession that affected much of the world, widely considered to have been the most severe since World War II. It was mostly down to the 1979 energy crisis (sound familiar?) caused by the Iranian Revolution which caused a disruption to the global oil supply, which saw energy prices rising sharply.
By the mid-Eighties most of Western Europe had come through it, shaken but not stirred. We Irish were the exception. The unemployment rate here in 1986 exceeded 16% of the workforce, and employment stood at just under 1.1 million. The same year, the Exchequer deficit was equivalent to 11.4% of GNP and Government debt was equivalent to 115% of GNP. Ireland back then was a very depressed place, with high unemployment, heavy emigration, penal levels of taxation, very little wealth.
I would write a cheque for 20 quid and ask my friendly publican to sit on it till Friday; I would pay the minimum 20 quid due on my maxed-out credit card and then go and put 20 punts of petrol in my beat-up Hillman Hunter; my late Father kindly lent me the money to buy a new boiler because the bank categorically refused to extend my over-stretched overdraft.
Talk about the light at the end of the tunnel… back then we couldn’t even see a tunnel.
Unskilled and semi-skilled workers were still, near the end of the decade, leaving in droves — a quarter of all emigrants to England were construction labourers. Also leaving the country in high numbers were our college graduates. The loss of these bright minds, one of Ireland’s few precious assets at the time, was popularly referred to as the ‘brain drain’. Interest rates stood at 18 per cent.
On mature reflection, I was luckier than most as my halcyon days in newspapers offered me all the overtime I could handle.
And so to the current forecasted recession. But it’s not all bad news. Ireland today is a country with low unemployment, relatively low taxation levels, inward migration and considerable wealth. After years of steady, and now strong, growth, since the crash of 2008, there is a much greater level of personal wealth in the country and entrepreneurial endeavour is more obvious and more appreciated in most quarters.
The country is much more self-confident and there is a much greater ‘can-do’ attitude. We will together, and with good governance — huge problems with healthcare and housing notwithstanding — come through it relatively unscathed. And I say that without losing sight of those in dire straits and in urgent need of help, economic and otherwise. And as a pensioner, whose weekly fee for my erudite comments for this paper would not afford me a decent bottle of champagne (no offence, Ed.).
At the end of the day, we could be in a far worse place than on this island of Ireland.