THE FASTEST GROWING ECONOMY IN EUROPE? 1509 LXXIX

THE FASTEST GROWING ECONOMY IN EUROPE ?

According to economist David McWilliams “Breakfast Roll Man” won the 2007 election for Fianna Fail. The epithet described the pragmatic , usually suburban , heavily mortgaged individual during the final years of the Celtic Tiger, who sought continuity in the rising curve of property prices on which his own (paper) prosperity depended.

A different era. Today, with an election in six months,  a new notional person has emerged – “Ashbourne Annie”- which Labour party strategists hope will bolster its flagging electoral prospects.   Annie, the result of “months of intensive market research” (!),  is a young, stay-at-home mother in Dublin’s commuter belt, heavily mortgaged,  in negative equity, struggling but seeing at last some light in the tunnel and hoping that  October’s  budget will provide tax cuts and welfare increases to improve further her lot. She represents the strategists’ vision of the classic floating voter whose support can be bought.

There is certainly  a pitch  for her vote with newly introduced universal free doctor’s visits for those under six and hints of increases in  non means-tested  child benefits come next January. Factor in flagged reductions in tax rates and perhaps a pay rise for her husband and Annie may feel well-done-by enough to be swayed by what’s on the table next election rather than the vague uncosted promises of the opposition.  While some social media comment has derided the “Annie” concept, it’s a catch all with appeal for swathes of the electorate.

If the carrots don’t work, what promised to be a tough election for Labour – with heavy losses already anticipated –  could morph into a disaster. The opinion polls, after some improvement,  show Labour support now well below the critical 10% level,  roughly half its 2011 result, with only the  potential budget “bounce” to come. It’s not just Labour. Any hopes  of being lifted by clutching onto Fine Gael’s coattails are also in the doldrums.  A poll in early August showed  Fine Gael becalmed in the mid-twenties, stalled after several promising months and well short of the magical minimum of 30%.

Ironically this has occurred just as the latest economic figures show Ireland set to become Europe’s fastest growing economy for a second year,  with 2014 growth now revised upwards to  over 5% and the prospects looking good. There is more money around. Unemployment is down. People are spending. New car sales are up 30% in the first seven months – the best figures since the slump began in 2008. Ireland’s debt to GDP ratio is down to 110% and falling ( for reference Greek debt is 175% plus and rising).

How to explain it all?  Ashbourne, Annie’s “home,” offers a clue, though hardly what Labour’s thinkers had in mind.  A pleasant dormitory town about twelve miles from Dublin city centre, Ashbourne’s population has grown rapidly in the last decade to about 15,000. Most of the new mortgage holders  are in serious negative equity, kept afloat by historically low interest rates. Families are struggling with reduced income, unemployment, shorter working hours and increased taxes and charges. In short a community typical of many across Ireland.

Ashbourne is well provided with shops. Branches of Ireland’s five major supermarket chains are located within several hundred yards of each other. The street between two of them is lined with shops – all vacant except for several charity shops. There are well established businesses in other streets, but  vacant shopfronts there also. Ashbourne Annie may be experiencing an upturn in her economic fortunes but so far it’s slight and, taking a cue from her town, recovery is unevenly spread and far from general. Again, a community typical of many across Ireland. Put simply the economic recovery at macro level has yet to trickle down to the micro level and opinion polls show an electorate far from gruntled.

2015 seemed to be going well. The Government  had avoided obvious banana skins. It was helped also by the outcome of the Greek saga and the continued disarray and fragmentation of the opposition. A flurry of (paper) activity and announcements during June and July gave the impression of progress towards fulfilment of some of the 2014 Programme of Government Priorities. Pronouncements that there would be no going back  to the profligate policies and  overspending of the past were counterbalanced  with  hints dropped about giveaways in October’s Budget.

In early July doctors were faced down over the Under Sixes issue  – a handsome vote inducement to the 1.7 million aged twenty to forty five – those most likely to have young children; cancer victims apart, nothing for those with really sick children over six without medical cards.  A media campaign – ongoing as I write, solemnly announced that over -70s would henceforth – like the Under  Sixes – be eligible for free GP visits cards.

The subterfuge here is breath-taking. Prior to  2008 ALL over 70s had been entitled to FULL medical cards, covering free visits to GPs and involving, additionally, crucially, access to a wide range of free medicines and treatments, plus additional benefits. Means-testing after 2008 substantially reduced those qualifying – the number dropping  by 16,356 last year despite an increase in the population over 70. The net effect is that fewer of those most likely to require expensive medicines and treatment – the elderly –  qualify, the savings used to subsidise the predominantly healthy under-sixes.

But also in July the fiasco that keeps on giving – Irish Water –  re-emerged . With public protest having largely subsided, the Government had thought the issue settled.  It put on a brave face when the shock  returns for  those paying the first water bills  – 46% – were revealed at the end of June. Worse was to come when the EU found that Irish Water’s borrowings must remain on the State’s balance sheet. In short it will cost – not next year but thereafter, reducing the amount available for other expenditure or tax cuts.

The issue has once again become the lightning rod for public dissatisfaction, with Irish Water  perceived to  be wholly the creature of the current Government, not a Fianna Fail legacy .Many eyes will now be focussed after September on the numbers paying the second bill.  With no immediate penalties for non-payment, more may decide not to pay to see what happens The Government’s dilemma is that ostensibly it has nothing further to give on the issue, short of  root and branch overhaul . If the “can’t pay, won’t pay” numbers rise, it could have no option.. Its re-electability  in any combination may hinge on this.

There has been considerable haruspication over the latest opinion poll results. The general conclusion is that, short of a miracle, the current coalition will not be returned without – at the very least – considerable  additional support. Even a mooted possible voting pact, with folk memories of the (successful) 1973 joint Fine Gael and Labour government programme, is unlikely to suffice. The three on – paper viable coalitions are Fine Gael – Fianna Fail, Fine Gael –Sinn Fein  and Fianna Fail – Sinn Fein, all strenuously ruled out by the principals – on principle. Interestingly, the ubiquitous bookie, Paddy Power, is strongly favouring  a Fine Gael – Fianna Fail coalition (at five- to –four,  with seven to-two the field). Does he know something we don’t?

12/08

 

 

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