The state of Ireland's economy

[Hassled]

Scary article in the Guardian today here.

It says "Ireland's government has slashed public sector spending by 7.5% of gross domestic product with a series of drastic cuts this year: public sector pay by 15%, child benefit by 10%, unemployment benefit by 4.1%. Another ?3bn will be removed next year, a total of 10% of GDP over three years: these measures are equivalent to the British government slashing its budget not by the £6.25bn planned by George Osborne in 2010, but by an incomprehensibly gigantic £150bn."

I knew things were bad (spent a big chunk of my childhood in Dublin, have a lot of family there) but I hadn't realised how bad. And while everyone seems to agree that the blame lies with the banks, corruption and developers, there doesn't seem to be the anger that you'd get in other countries - in the UK even. Why?

Totally agree with suiledonne and wukter.

I have 3 sisters still in Ireland. One is SAHM mum of 5 children. Lucky her DH has a good job and they bought their house 10 years ago as they were rising and not at peak. Income supplemented by sick pay for her - sever PND. No luxuries. Her DH is a saver so they save half of whatever it is they want - new car for eg., borrow rest from credit union and once that loan is paid off they keep putting same amount away for next thing.

Sis 2 - works part time in Dunnes to make ends meet. No luxuries. Not as good at saving though.

Sis 3 - bought at height of boom. Lived beyond means for years. Now has first child. Cannot afford to be SAHM. Negative equity in house. Running two cars as live in commuter belt.

All different attitudes.

It's the housing estates in areas where nobody wants to live that baffle me. WTF were the developers thinking? Some of those estates may well have to be demolished. Unbelievable. Just totally unbelievable.

Actually do you remember that line in The Committments? "The Irish are the blacks of Europe"? Well i think we felt that for years. Certainly in the 80s when I was leaving school, looking for work etc., Ireland did feel very backward in lots of respects. Then it became 'sexy' to be Irish or to visit Ireland. More British shops started opening. More credit was on offer. And off it went. It was totally unsustainable.

I do think there's a world of a difference between a 42 year old who bought 12 years ago and a 32 year old who bought 2 years ago.
Natural thing to pair off & nestbuild at that stage of your life and you do what you can in the circumstances.
Timimg is a definite factor as well as attitude.

I will tell you a little anecdote. DP and I first thought of buying a house 4 years ago. Strict budget, with wiggle room incorporated. We went to see an ex-council mid terrace 2.5 bed house in a decidedly un-treelined estate in Dublin.
We joined the queue to view it.
As I walked ahead into the kitchen, DP leaving the front room heard an offer being made e48,000 over the asking price. Up 18% in less than 3 minutes. DP called me back before I stepped over the threshold of kitchen and we went back to our rented apartment with the thin walls and mould.

Yep Buda I completely agree.

And getting back to the points made above about why isn't there more anger.
Because it's back to our natural level now, not below what we deserve
We are ashamed. Of Disneyland and the new kitchen. We "lost the run of ourselves". We were greedy too.
Not that I subscribe to that view but I feel that underpins this sense of resignation.

wukter Similar happened to us a couple of years ago. Every now and then DH gets nervous about still renting so we went to view a house in an estate in our village.

I was really unimpressed with the size etc for the money but it was within our budget. We put in a bid but it went way above our budget and I have been so thankful ever since.

Those houses are now on the market for nearly 80,000 less than we offered and there are loads on sale.

If we had bought it we would be stuck there forever whereas at the moment we might be renting but at least we have options.

Are you still renting?

Its shocking isn't it. I'm Irish but haven't lived at home since I was a child. But my Mum is in Waterford, and was alway amazed at the tales of people buying houses in the outskirts of the city to comute to Dublin every day. A 4 hour trip each way. Houses which now are empty and can't be sold as there is no local demand.

My DB and DS's schoolmates from Waterford have all left the country - all in England, Canada or Austrailia. For a while I thought my generation would be the first not to have to leave the country to find work, but the Government screwed it up.

No we moved "down the country" Suiledonn, houseprices lower in the West and bought nearly 4 years ago. In negative equity now. As long as DP is working we'll be ok as we never got into this as a stepping stone but as a home. But I was made redundant in '08, unemployed, then found part time work, then got (unexpectedly) pg so circumstances have changed a lot.
We always were very boring people though, savers not borrowers. People were puzzled by us a few years ago, no flash holidays, no granite worktops, etc etc so we have (had) a bit of a cushion.
Would you consider buying now?
My B F & her DP just have in a Dublin commuter town. I can't decide if she's a genius or insane.

I have a lot of admiration for the Irish. They seem to be dealing with a tough situation in a much more realistic way than we in Britain are likely to do.

Good luck to them. I hope the bad times pass soon.

that jolly old soul Morgan Kelly here
He is highly respected and has a good track record.

(I think I heard on the news this morning that we are supposed to experience 3 percent economic growth in Ireland in 2011...Bring it on!)

This is the article I meant to link to a more recent article published last Saturday

hope so Stleger. But the debt is still enormous.

From where I am sitting (in Cork, in retail) nobody is shopping today! David McWilliams has just been moaning about people who have money saving too much, I'd agree with him. I am watching the UK economy. We were accidentally in Marks and Spencer outside Belfast on the first day of the sales in December, I had never seen people loading clothes into trolleys in a MandS before. (I have seen people buy a lot in Penneys/Primark). As NI is heavily 'public sector' I imagine its economy will take a hit.

Let McWilliams moan all he likes, he has done ok out of this recession. Lack of consumer spending is hurting the country, but tbh I am not going to fritter my family's meagre disposable income on fripperies, i am going to save it because I fully expect harder times ahead. Multiply my attitude by practically everyone else in the country, and no wonder sales taxes are down, retail jobs being lost etc etc. And on the spiral goes.
We should all be doing our bit, but I'm not wasting my spare e20, and sacrificing my families future security.

I would imagine retail sales in the North will soon be taking a hit as the euro and sterling achieve parity. Not so many heading North any more.

I am Irish and agree that it all came down to greed:

Greed on the part of politicians who didn't care what they did to stay in power

Greed on the part of developers who saw they could get away with charging crazy money for property and went ahead and

A mad greedy lifestyle indulged in by come people who thought they could live on credit and never have to face the consequences

You would not have believed the amount of people swanning around Ireland, living like millionaires during the boom years. Ordinary people going on 3-4 foreign holidays a year, kitting their kids out in designer gear, refurnishing the house on a whim and changing the car every twelve months.

Unfortunately, the people who didn't go mad are now having to pay the price as well in job losses, salary cuts and negative equity.

A lot of ordinary people did that but many more didn't.

In any case all they did was wreck their own personal finances, nobody else has to pay for them for the next 30 years.

I know many people who are struggling now either due to job loss or mad crazy spending in the hope that the tiger would last forever

I guess I'm one of the lucky ones. I'm self employed, saved during the boom years, ran a tight ship over the last year and doing ok so far this year. Bought house about 5 (I think!) years ago, before house prices rocketed, so I'm not in negative equity (house is probably worth same now as when I bought it). Despite being on a very low income I have a year old car and a foreign holiday every year...fortunately I'm blessed with an innate ability to budget well

Just back from the gym - it's closing this weekend. The owner just told me she can't afford to keep it open

But you were keeping the gym open! I met a lady today who lost her super job before Christmas and now has a low paid poxy one (like mine!) About two years ago she told me that she only stayed in 5 star hotels, she had had enough of slumming it in 3 and 4 stars. How could so many people have been so self important and so stupid. (Please come and buy something, please..)

I'm Irish but left about 15 years ago. First to study and then to work because the options at the time all seemed to revolve around call centres.

In the interim years I went home about 4 times a year, and with each visit became more dispairing at how consumerist and self-absorbed everyone seemed to have become. Every one was obsessed by property and their property "portfolios". Every conversation seemed to desend into a pissing contest of who had more: cars, clothes, holidays, money. I found it shocking: and I live in central London and work in finance.

When I had DS1 a few years ago, I really wanted to go home to be near my family as DH is an only child and I wanted our DC to grow up with an extended family. After a lot of thought we decided not to purely because we felt that the national obsession with wealth was not an environment we wanted our kids to grow up in. Given where we were coming from, I think that speaks volumes.

That's not to say I not saddened by the way things are now. It's awful and I am sure plenty of people have found themselves on the wrong side of things through no fault of their own. But there are others, who openningly engaged and participated in the blowing up of the bubble and are now crying foul. And that really annoys me. Where is their personal responsibility in all this?

It has been oddly fascinating going through this - we were in England in the eighties and had a very low income. It was at the point when property prices were taking off there and everyone was 'getting on the ladder'. We were back in Ireland just as negative equity hit, and grateful to be away from all that. So in a way we had learnt to be cautious when there was mayhem here. There are some massive mansions near us, but they don't seem to be on the market at bargain price...

That's another issue stleger - there is no visibility on what houses actually sell for in Ireland due to privacy laws. In the UK the price is published by the land registery a few months after it has been sold.

stleger what shop in Cork are you in? I might make a purchase.

We moved here from London in 2002, saved up a bit and went to see a mortgage broker in 2006. They were willing to lend us an enormous amount of money, which would only have bought a very mediocre house. So we decided to rent instead, thank god. I sincerely hope there is no 'NAMA for the people' - I feel sorry for people in negative equity and debt, but I do not want to pay for them.

I am surprised that there have been no riots yet, it seems the Irish are used to poverty, and the Celtic Tiger certainly sat oddly with them. I've never seen such money spent on bling and tat!

That's interesting Starmucks, re the element of personal responsibility involved. If people do feel that maybe their actions played a part in this, that would explain the subdued reaction/comparative lack of anger now. But in fairness, it was so bloody tough in Ireland in the 70s/early 80s and before, that when the good times did come, people would have gone a bit nuts.

Some members of my family in Ireland have certainly been living the good life - 4 DCs at private schools, her a SAHM but yet the cars, the holidays, the second home in the country - and I'd always just assumed they were lucky, they could afford it. Maybe they couldn't - I hope they'll be OK.

I know what you mean. My dad was in retail and suffered big set backs in the 70's and 80's. He still lectures me on how things are still comparatively better now because we don't have rampant inflation and interest rates in the 20s. By the same token, I don't he understands that the negative equity that some people are sitting may not be clawed back in their life time.

Are people really that subdued? My passport was held to ransom by the pp office for nine weeks, and all I hear is more threats of strike action. But what is that going to achieve - there is no money. A lot of people still can't accept that things have changed irrevocably.