Decisive action helped turn Ireland's fate around

Mr Noonan, speaking at the Regent Singapore hotel yesterday, said that Ireland had "decided it was better to take the punishment upfront" and that this had helped its economy recover fairly quickly.
Mr Noonan, speaking at the Regent Singapore hotel yesterday, said that Ireland had "decided it was better to take the punishment upfront" and that this had helped its economy recover fairly quickly.ST PHOTO: LIM SIN THAI

Difficult measures had to be taken after 2008 crisis but strategy worked, says Irish minister

Ireland bounced back from the brink of bankruptcy from the 2008 financial crisis with strong economic growth after a few tough years, Irish Finance Minister Michael Noonan said yesterday.

Difficult policy measures were taken despite a possible loss of support from the ground and citizens had to make sacrifices, but it mostly worked, he told a public lecture held at the Regent Singapore hotel on St Patrick's Day.

Mr Noonan, wearing a bright green tie as a nod to Ireland's national holiday, added: "Contrast this with other countries in Europe who didn't make the decision so promptly and you can see the difference."

Ireland's economy grew by 5.2 per cent last year and across all sectors - divided into two public and 12 private sectors during the recovery process. In the last three months of last year, its economy grew 7.2 per cent, year on year.

"Every sector put on extra jobs in 2016 so we have an economy now that's broadly based, growing across all sectors and regions, starting from Dublin to the Greater Dublin area and spreading to all cities and into rural Ireland as well."

This is a remarkable feat from a rapid decline in 2008, as Ireland's economic model relied strongly on one sector - building and development - back then.

EVERY LITTLE BIT COUNTS

It's a lesson of how small margins and changes can have big economic effect.

IRISH FINANCE MINISTER MICHAEL NOONAN, on how more tourists arrived after tax rates were cut and an aviation or travel tax of just €3 was scrapped.

Mr Noonan recalled it was where "cheap money" prevailed, funding property development at ultra-low interest rates, and inflation across all property sectors. The Irish government was relying on transactional taxes from property, and when the sector collapsed, banks went underwater too.

In 2010, Europe and the International Monetary Fund (IMF) had to intervene with an international rescue package worth €85 billion (S$128 billion). The recovery programme was over three years and came with "difficulty and great sacrifice" as Ireland overhauled its economic model.

"We decided it was better to take the punishment upfront and restored our fortunes fairly quickly," said Mr Noonan, adding the IMF would visit Dublin every quarter to ensure things were moving along.

Ireland rescued its banks and had its own programme to re-examine each sector closely. For the tourism industry, he said, tax rates for the hospitality sector were cut, aviation or travel tax of only €3 was abolished, and more than two million additional tourists came in.

"It's a lesson of how small margins and changes can have big economic effect," he said.

Ireland is now coping with happy problems such as ensuring there are enough homes for people who have returned or moved to the country since its recovery.

However, there are some clouds over Ireland, with Brexit, the Trump administration in the United States, and issues such as protectionism.

"Brexit is a huge risk... it's about a common labour market, we don't want that arrangement to change. And Britain is one of our big trading partners. We don't want the loss of competitiveness tariffs would impose on our goods and services.

"Mr Donald Trump's America is a secondary risk, and we're not sure yet how big a risk that poses because the policy positions have not been explained in detail.

"A bit like Singapore, we live by trade and have to export. Protectionism in the United States doesn't suit Ireland and I hope it doesn't go in that direction."

A version of this article appeared in the print edition of The Straits Times on March 18, 2017, with the headline 'Decisive action helped turn Ireland's fate around'. Print Edition | Subscribe