In recent decades, whenever we have run into serious economic trouble it is because we have ignored the basics and then were left scratching our heads about why specifics didn’t work.
eliance on tax windfalls from property proved catastrophically costly before. Revenues were depleted and when the banking tsunami broke we were exposed to waves of debt and very few safe harbours. A painful recovery has hopefully left us wiser.
Over the past few years the Fiscal Advisory Council has repeatedly warned of how the Government’s dependence on corporate windfalls needs to be unwound.
In May last year, it cautioned it is now “urgent” for the Government to wean itself off the exceptional levels of corporation tax which have helped fund cost overruns in health and other areas in recent years. But dependence on something that may not be stable is always a risk.
Now stockbrokers Goodbody have flagged concerns of how a drop in profit for global tech giants here is a bigger risk to the economy than the current wave of job cuts within the sector.
Goodbody chief economist Dermot O’Leary also acknowledged worries about new foreign direct investment here in the short term, as 80pc of inward investment comes from the US and Britain. “Two economies at risk of recession in 2023 and a similar proportion of new investment last year was focused on two sectors – pharmaceuticals and technology. So we ought take nothing for granted,” he said.
It should be stressed that the report was, by and large, upbeat and indicated the tech sector is likely to continue to grow. It also noted Ireland as “being an important part of those growth plans”.
But it does chime with what the fiscal council has also said in the past: major costing commitments, which are leveraged off buoyancy in tax receipts, can boomerang.
On the positive side, it also notes “a record household savings haul and the ability for Government supports due to the best budget position in the eurozone”.
Nevertheless, putting state funding on a sustainable footing, protecting us from the vagaries of international headwinds, is something the Government must keep in mind. It concurs with recent Cabinet pronouncements that housing needs to be the number one political priority. And it states that new housing numbers in Ireland were “well below” what we need yearly.
The report suggests more state support will be needed to ensure that housing supply does not fall further below targets. Hopefully the many harsh lessons we have come through will save us from revisiting avoidable pitfalls.
John Maynard Keynes once described education as “the inculcation of the incomprehensible into the indifferent by the incompetent”.
You’d surely like to think we have moved beyond such a point. For as intimated earlier: failure to recognise what is going on around us today exacts an exorbitant price tomorrow.