Why the Irish deserve a helping hand to leave their bail-out programme
ALTHOUGH the prospects for most of the euro zone’s periphery remain dark, there is a glimmer of hope in the west. By the end of 2013 Ireland could leave its bail-out programme and stand on its own feet again.
An Irish recovery would provide a boost for Europe and its de facto leader, Angela Merkel, the German chancellor, as much as for Ireland and its prime minister, Enda Kenny. It would show that the controversial treatment of austerity and structural reforms imposed as the price of bail-outs can work. It would reassure the electorates of core Europe, especially German voters who go to the polls in the autumn, that rescues do not condemn them to a never-ending call upon their taxes, as seems to be the case with Greece. And a sustained return by Ireland to the bond markets would boost confidence more generally, helping other bailed-out economies such as Portugal and Spain.
Unlike the struggling countries of southern Europe, Ireland has a good story to tell. Last year it dodged the euro zone’s wretched recession. Unit labour costs in the country have come down sharply, making the economy more competitive. That has enhanced Ireland’s allure for foreign companies, which continue to favour the country as a manufacturing and services hub for international markets, not least because of its low corporate-tax rate. These are useful advantages. If things go well in 2013, Ireland might be able to leave its programme without any further assistance.
