Ireland is Coming Back and Other News, Ambassador’s Message, 7 November 2014

Irish economic growth is looking robust and its recovery appears to be broad based with growth this year estimated at 4.6% and forecast at 3.6% next year. This is all the more impressive given that growth in the EU, our major trading partner, is sluggish and forecasts for next year at 1.2% are retreating http://t.co/5tfYdcKWnl In Ireland, unemployment has now fallen to 11% and industrial production is up. Revenues are also buoyant, greatly helping the exchequer. On top of this, the Government successfully borrowed €3.75 billion in international markets at below 2.5%, allowing us to accelerate our early payback of more expensive IMF loans, easing repayments and ultimately our debt-to-GDP ratio, the critical measure of solvency http://t.co/IYMGVDXVYE

The engine of much of Irish economic growth has been the IDA, doing a tremendous job since the 1960s in promoting Ireland as a location for Foreign Direct Investment. The IDA has helped transform Ireland. This has held true even during the challenges of recent years, thanks to its constant evolution toward commercial frontiers: as IDA CEO Martin Shanahan tells us “since 2010, over 100 high growth global companies have set up in Ireland with the support of IDA.”

In the latest development, four hundred new jobs for Cork, Dublin and Galway from 8 North American and European based high-growth companies, spread across software development, telecoms, internet, digital and social media. As the Taoiseach Enda Kenny TD said: “I told the Dublin Web Summit that Ireland is one of the most exciting places in the world to build the enterprises of tomorrow and I’m delighted to welcome eight exciting and vibrant companies to Ireland to do just that. More information here http://t.co/jof58B6EUy

The Taoiseach was referring to the big event in Dublin this week which welcomed over 20,000 guests. The Dublin Web Summit ranks as one of the world’s leading gathering of high-tech innovators and venture capitalists. This link sets the scene http://t.co/Ifotbuiotx   The spin-offs are many, including hundreds of millions of euros worth of advertising, the use of 97 venues across the city and a huge boost to local tourism. The Irish Times reported that “Companies that have opened offices in Ireland, directly as a result of the Web Summit, include Smartling, Qualtrics, Wonga, Quantcast and Nordeus.” For news of the Summit check out its blog here http://blog.websummit.net/

One of the difficulties for Ireland’s SME sector in recent years has been access to finance, fallout from the financial crisis and the self-inflicted plight of our banking sector. It is a very welcome development then that a new fund of €800 million is being made available to SMEs under the Government’s new Strategic Banking Corporation of Ireland (SBCI). The SBCI is a new company, initially financed by the German Promotional Bank KfW, the European Investment Bank (EIB) and the directed portfolio of the Ireland Strategic Investment Fund (ISIF). The involvement of KfW follows directly from discussion between the Taoiseach and Chancellor Merkel following Ireland’s successful exit from the EU/IMF Programme on finding ways to reinforce Ireland’s economic recovery. Report on the launch of the SBCI here http://t.co/9Es8vL4IVx   and the Irish Times’ editorial comment on this is here http://t.co/1owuESzsHd

We were reminded of the origins of our financial crisis by the publication this week of the ECB’s letter to the Minister for Finance, Brian Lenihan, in November 2010. Text of the letter, which pretty much insisted that Ireland apply for a bailout if the EBC was to continue emergency funding of the Irish banks, is here courtesy of the Irish Times http://t.co/2UhPKAqsO8 The letter is important confirmation of what was generally known or at least accepted but of course if it only part of a much bigger story, critical factors in which included the bank guarantee and the disaggregation of euro bond risk which made Irish borrowing punitive and eventually unsustainable.

On the current Northern Ireland talks, Minister Flanagan and the Secretary of State for Northern Ireland Teresa Villiers met the parties in round table discussions. The engagement was positive and the Minister said that “following these meetings, both Governments will be in a good position to assess the scope for possible agreement.” Both he and Secretary of State Villiers are due to report back to the Taoiseach and Prime Minister Cameron respectively on the talks by 28 November. Full statement here https://t.co/uPaLP7olqh

Irish emigration has been a feature of our recent history, particularly since the Great Famine. Indeed the combination of the Famine and sustained emigration has meant that Ireland has not yet recovered demographically to the pre-Famine level of population of 8 million. Given the links between population density and socio-economic development, what Ireland would have looked like without the Famine is the great “what if” of modern Irish history. One important aspect of emigration was the level of remittances sent back home, up to £100 million a year in the 1940s and 1950s – very helpful sums for those in Ireland during what were very bleak years economically. It continues to this day: Ireland’s Diaspora remitted some €9.6 billion ($12 bn) to Ireland since 1990; some reflections on this here in an Irish Times Op Ed http://t.co/yhzEcIQkSI

Eamonn

Eamonn McKee

Ambassador Tel Aviv

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