Springtime or springshowers?
As we race through February and into the Spring of 2015, it seems as good a time as any to pop open a few seasonal metaphors. The early shoots of recovery for the Irish economy are continuing to appear in the garden, and in particular GDP is expected to reach 4% this year. Unemployment is likely to fall to 10% this year, and for the first time both short and long term unemployment are falling. Youth unemployment though still high, is also starting to fall- reducing the annual migration of students on graduation to warmer economic climes. Houseprices, though still far from their heyday, are climbing gradually, in Dublin but also in other areas of the country. The good conditions are creating a strong sense of optimism and consumer confidence levels have now regained levels not experiences since 2006.
So everything is rosy in the garden, we can take off our thermal underwear, throw away the brollies and dust down the barbeque in the next few months? Well not quite, there is some very unsettled weather in the Mediterranean and this is threatening to grow into a tornado that could knock down the protective fence. If Greece does leave the Euro there may be a very unsettling impact on financial markets and possibly impact on the value of the Euro.
Also not all parts of the Irish economy have experience growth, there are large regional disparities and sectors of the economy where it is still pretty frosty. As ever gardener knows, old growth will hold back the new shoots if it is not severely cut back. Household debt is still very high for many, particularly those in the 35-45 year old age group. A recent CSO study showed that the median household debt to income was over 200%, even allowing for houseprice increases it is difficult to see how this generation will move forward without some type of intervention. To have beautiful roses, the dead branches need to be cut back early to allow the plant put its energy into this year’s blooming and growth- the same needs to happen with household debt. The squeezed middle are in danger of becoming the lost generation, with repercussions for everyone as they are the support for both retired and younger elements of the population.
During the worst of our five year recession, it was notable how our strength as a society allowed us to weather the storm. The OECD better life index, which measures and collects opinions on a wide range of living conditions showed that while satisfaction with life in Ireland fell by 6% during the recession, our level of volunteering increased by a similar level. Ireland already has one of the highest levels of volunteering in the OECD and a remarkable 95% of Irish respondents felt that they could get help or support from someone in their community. The ability to help each other through this recession cannot be measured as precisely as economic recovery, but the quality of the soil is as important as the seeds- to stretch the analogy to breaking point!
The worst of the storm appears to have passed, but as the adage says ‘Ne’er cast a clout till May is out’. In other words don’t put away the winter woollies just yet but maybe start cleaning off the barbeque.