It must be some kind of Irish joke that the rainy-day fund that is meant to save us during the next economic downturn, won’t see that light of day for another two years. By that time we could be in a post-Brexit world with all that that means to business and the economy of our island. We could easily see a recession, just what the fund was meant to help us get through, Also, the once €1billion fund appears to have been halved in size so let’s hope any economic rain won’t turn into a deluge.
What politicians want
Politicians don’t like rainy-day funds because there are no votes in them. Savings don’t deliver more nurses or guards. And that’s a real problem. Despite some of the UK’s business community coming to their senses about the damage that Brexit will do (and it’s already happening) to their economy, the UK’s politicians still appear to want to walk over a cliff of their own making. British Foreign Secretary, Boris Johnson, was quite unbelievable about Brexit, speaking in the House of Commons yesterday. He and his pals are still on their march.
Crystal ball gazing
Nobody knows what is going to happen with Brexit or even when it all might happen. And that’s why it’s pure folly for us, the most exposed EU economy in a post-Brexit world, not to be squirreling away as much money as possible, and as quickly as possible.
The ATM is broken
The self-inflicted damage we caused during the economic collapse means that we have even less room for manoeuvre should things go wrong. We can’t borrow any more. With over €200 billion of national debt means that the international money markets well is dry if we have an annus horribilis or two.
In trying to steady the ship there are two choices. You either pay down the national debt as much as possible or else you put that money to work in its own right. The calculation is whether you can get a better, long term, return on State infrastructural investment, versus paying back the money and saving the State the cost of borrowing.
Some track record
And that’s the problem. Even with near historically low interest rates the State has a particularly poor record on infrastructure spending overruns. For example, what ever happened to the €400m children’s hospital. Before a sod was turned that had morphed into a cost of over €1000m. So the best worked our rates of return become meaningless when project budgets are pie in the sky.
At best, it’s clear that the last eight years has taught us nothing. At worst ISME will be advising our members to make their own lifeboat arrangements now, in case any rain might turn into an economic deluge.