Concern in mounting in Ireland this Christmas that a set of rapidly deteriorating market conditions and government mis-steps are threatening to pitch the entire island into an unprecedented economic crisis.
According to official financial predictions, some 117,000 jobs will go next year in the 26 Counties. Unemployment levels will rise to an average of 9.4 per cent, despite an estimated 50,000 people emigrating.
In its Quarterly Economic Commentary, the ESRI warned the 26-County economy is in the midst of a contraction “that is large by both historic and international comparisons”.
The report says the Dublin government will struggle to honour the national pay agreement and raised the possibility of pay cuts in the public sector.
Meanwhile, the resignation today of the chief executive of Anglo Irish Bank -- over an Enron-style concealed debts scandal -- has further eroded confidence in Irish banks, the subject of a troubled governmental bail-out.
The resignation is the latest in a series of blows that have raised public concern over the government’s ability to handle the economic crisis. The story broke just as the Dublin parliament ended its business for the Christmas period, leading to suspicion that it was timed to avert further political upheaval.
The revelation of financial irregularities has also raised doubts about the statements coming from the Irish banks, currently underwritten by the government’s guarantee scheme for depositors.
Sinn Féin’s Arthur Morgan said the problems originated with “unaccountable senior management who have engaged in appalling practices.
“The government must through the Department of Finance immediately send in auditors to all banks covered by the guarantee scheme.
“It is imperative that the government understands the degree of debt in the banks the state has underwritten”.
Ireland has the highest mortgages and rent payments in Europe, which has placed the homes of hundreds of thousands of people in jeopardy.
It is now being reported that an average of seven homes are repossessed every week, while ten families are evicted from rental accommodation. With Ireland now officially the fourth most expensive country in the world to live, almost 14,000 families are unable to meet their monthly repayments on home loans.
The scale of the crisis could be even worse, as a significant number of cases of voluntary home surrenders are never revealed in the figures.
Sinn Féin has attacked the Dublin governmment for failing to come up with “even one new initiative” to deal with the emergency.
Arthur Morgan, speaingg during one of the last parliamentary debates of 2008 this week, called on the coalition government to introduce a two year moratorium on repossessions.
“The lending institutions who are responsible for this crisis should be compelled to suspend interest and other charges and penalties as these only exacerbate a family’s financial distress,” he said. “Repossession should always be the last resort.”
He said lenders should be required to conclude an ‘affordable mortgage and debt payment arrangement’ which protects a ‘minimally adequate’ standard of living.
He also dismissed the government’s Economic Renewal Plan, announced this week, as “a collection of rehashed policies with some new economic aspirations but very little substance”.
The plan focuses on providing funding for high-tech and scientific research in the hope of creating highly paid jobs through venture capital start-ups.
The announcement was greeted with scepticism as it came in the same week that it emerged that a policy decision not to carry out scientific quality control tests on Irish meat was to blame for this month’s chaotic recall of Irish pork and certain beef products.
The tests, moderately priced and routine in most European countries, could have prevented the 180 million Euro recall which badly damaged the Irish farming industry on both sides of the border earlier this month.
Mr Morgan said the plan “certainly does not reflect what is required to stabilise and re-energise the economy”.
“There are no figures, no targets and no timeframes.
“We need to see the detail of the plans for investing in social housing, school buildings and infrastructure projects that will improve competitiveness.
“We are still awaiting the detail of real job creation strategy with a concentration on retraining and getting people back into the workforce, supporting indigenous business, particularly in relation to exports.
“And we have heard nothing from the Government in relation to the development of an all-Ireland economy to end duplication and waste and put the country on the strongest footing for economic recovery.”
The border has combined with the financial crisis to create massive distortions in the economy, particularly in the retail sector.
The euro yesterday reached a new all-time high against the sterling as the prospect of a further cut in interest rates loomed. Combined with diverging rates of VAT sales tax, goods are now up to 50% cheaper across the border.
Long lines of shoppers have created havoc this Christmas in border towns, where traffic jams and a shortage of parking have led to chaos.
Stores in Donegal and in the south are facing potential ruin while outlets on the other side of the border, in Fermanagh and Tyrone, are on course to become the most profitable supermarkets in the world.
The Enniskillen branch of a discount department store has broken all sales records after recording millions of pounds worth of sales in a single week. It was reported that one supermarket chain was forced to close their doors due to massive crowds in border towns recently.
The Dublin government’s response to the dilemma was to exhort shoppers to be “patriotic” and spend their money only within the 26 County area.
Despite the retail bonanza, the Belfast Assembly has struggled to cope with the economic crisis. It was warned this week that few options are available to it while key economic functions and powers remain under the control of the British government.
Speaking in the Belfast Assembly, Sinn Féin President Gerry Adams said “the so-called credit crunch respects no boundaries or borders”.
“Its affects are being felt in all parts of this island and throughout the globe.
“The collapse of the global economic system is clearly a major factor in all of this, but it is not the only factor.
“The reality is that an unregulated free market does not work for working families or the poor... That is the big historic lesson of this time.
“These difficulties are aggravated here because British direct rule has left a legacy of underfunding, poor infrastructure and bureaucratic incompetence.
“The lack of economic and fiscal sovereignty, and the British government’s inadequate annual subvention, and the very real and negative effects of partition, limits the options available to the Executive.”
Mr Adams praised the northern Executive for measures taken to “in areas where we do have responsibility”. The Executive recently allocated almost 70 million pounds to tackle the crisis, including special payments to alleviate the cost of high fuel bills this winter.
But he said it was “important to note that the British Treasury attempts to impose its own political and fiscal philosophy on how the government here does its business.
“For example, this approach dictates that the public sector can only become efficient if exposed to competition from the private sector, that assets should be sold off and public services privatised.
“Incidentally this is exactly the same strategy that the Irish government has pursued as it willfully squandered the wealth of the Celtic Tiger.
“This is the wrong strategy
“Ta se tharr am go raibh athru ann, ta smaointi agus baruileacha nua de dhith.
“There is a need for new ideas, new thinking and real change.
“The point behind all of this is that the economy must serve the people. Society should not be judged on the wealth of its elites.
“It should be judged by the condition of its lowest class, the working poor and citizens caught in the poverty trap.
“This means developing solutions, strategies, north and south that can chart a different way forward.
“It means ending the nonsense of two competing economies on this island.
“An all island economy makes sense.
“Here in the north, among other initiatives, it also means pressing the British government for greater fiscal autonomy and the ability to gather taxes and manage our economy independent of British Treasury restraints.”