Ireland drives out of recession

By Henry McDonald

Five years after the Irish government decided to stand behind its crippled banks - in a bailout that cost 70 billion and forced the country to go cap in hand to the EU and International Monetary Fund for its own rescue package - Ireland is officially out of recession. Growth is projected to be 2.7 per cent next year.

It has been a very rough road - 14 per cent wiped off GDP, house prices down by more than 50 per cent, unemployment peaking at 15 per cent - and recovery is not yet guaranteed.

Ireland this week launched its seventh austerity budget, paving the way for the eurozone nation's exit from the international bailout programme in just two months' time.

Finance Minister Michael Noonan said the government would seek to claw back 2.5 billion ($4 billion) via taxation hikes and spending cuts.

"One of the primary tasks of this budget is to lay down the conditions for a successful exit from the bailout programme at the end of this year," Noonan told lawmakers in the Dail or lower house of parliament.

With Ireland on course to leave the international bailout programme and recover its economic sovereignty in the coming year, three people working in the three sectors hit hardest by the economic collapse - construction, small business and tourism - look ahead to their own and their nation's prospects.

The builder

When Brian McKeon's brother was coming in to land last week on a flight from Turin, he noted with pride two yellow cranes below, just to the north of Dublin Bay. They were among very little construction plant visible anywhere in the city, where property prices have crashed more than 50 per cent.

McKeon's family firm, MKN, has been increasing its workforce on the site, which has spectacular views out to Howth, the Irish Sea and the Dublin mountains in the far background.

They started back on the site in March with 30 workers and will eventually employ up to 150 people to complete the building of high-grade luxury apartments - exactly the type of properties most battered by the housing crash.

Since the end of September McKeon also completed the sale of 20 new houses in the town of Swords, near Dublin airport. He hopes he can repeat the same trend-bucking sales achievement when the job in north Dublin is finally finished next spring.

"We sold the homes up at Swords over the space of two weekends," he says, "and it shows that there is a demand for houses out there once more. There was even a slight increase in the prices of the homes - by a couple of thousand euros here and there."

Some 60 per cent of all the jobs lost in the recession were in the construction sector, and of the 9600 new jobs created in the first two quarters of 2013, around 6400 were people being recruited back into the building trade.

McKeon says a minister of construction would be just as vital to the economy as the three ministers who currently look after farming and agriculture in Ireland, and he is irritated that the building business gets little government support.

"If PayPal creates 15 extra jobs in the hi-tech quarter of Dublin, you get Enda Kenny or a big minister turning up," he says. "I am employing 30 people here, with the hope of another 120 workers coming on to the site, and we get no recognition.

"The trouble is building and construction got a bad name because of the bad apples that played the property casino in the boom years. But they have all gone from the industry, leaving the genuine builders and developers left to get the industry moving again.

"We didn't make the mistake of overstretching ourselves in the boom like they did, as they built everything, everywhere, without any controls. But people still need houses to live in, and there is a shortage of decent homes in this country."

A survivor of the building bust, McKeon praises the coalition government in the UK for stimulating the construction sector with its Help to Buy newbuild scheme and other programmes.

"They have created incentives to build over in Britain now, with the removal of red tape and so many regulations. Our problem coming down the track here is that we are about to introduce some of the most stringent regulations in the industrialised world on building ... But overall, I'm still optimistic: I can see the green shoots."

The cafe owner

A few months ago Garrett McMahon and his partner Triona defied the doomsayers and took an enormous gamble by setting up a coffee shop in Glasnevin, close to Dublin's Botanical Gardens.

"There is demand in this area for a better product, for nice food, and it's great that in Glasnevin we are not reliant on one single market," McMahon says.

"You have the workers from the Met Office up the road, and the builders over there working on extending the Botanical Gardens. You have pensioners coming in, parents with young children on a day off looking for a nice coffee," he says.

"People are still willing to spend money out if the product is right."

McMahon says the climate for small businesses like theirs needs to be less restrictive.

"We pay 2500 rates to Dublin city council. We pay for our water, we pay for our bins and we still have to sweep our own footpath every day. There are too many regulations which constrict small to medium-sized businesses. It limits what we can do."

Garrett and Triona are putting in 12 hours a day, getting up at 5am to prepare fresh food.

While they admit they are exhausted when Sunday comes and they can take time off, they remain upbeat about their prospects.

"Am I optimistic? Absolutely. From opening this business a couple of months ago the sales have increased at the till every week. We have all had to endure several really tough years but I do think we are pulling ourselves up bit by bit," Garrett says.

More passengers have arrived and departed from Dublin's airport this year than in the last year of the Celtic tiger boom.

The airport director

Paul O'Kane, the ebulliently optimistic public affairs director at the airport, notes that between January and July this year there was a 14 per cent increase in traveller numbers.

"For the first time since 2007 there has been monthly growth in numbers coming through our doors. That is a sign of real improvement in business."

O'Kane puts the rise down to several factors: a huge spike in transatlantic traffic; the presence on Irish soil of the US customs and immigration service, which means passengers don't have to go through heavy security checks after landing in the US; the growing presence of Gulf-state-owned airlines in Dublin; and the recession-proof Irish wanderlust.

"We are becoming more attractive to travellers from Northern Ireland and Britain who are going to the States and Canada, because you can go through all the security and customs checks by American staff here before you even touch down in North America," he says.

"We also have more routes across the Atlantic than many British and European cities: there are now 224 flights per week from Dublin to North American destinations."

To cope with the boom in transatlantic business, Irish state carrier Aer Lingus is opening up new routes to San Francisco and Toronto.

Cynics in Ireland grumble that the 700,000-plus passenger figures are boosted by a huge number of young emigrants seeking jobs and a new life outside recession-blighted Ireland. O'Kane, however, dismisses this theory as a myth.

"It's a nonsense to say the extra numbers are made of emigrants getting out. If these figures were to constitute up to even 100,000 leaving through Dublin airport due to emigration, there would be whole villages and towns completely empty across Ireland. It just doesn't add up," he says.

"The real reasons for this number are the extra tourists coming into Ireland and the additional numbers from Northern Ireland, Britain and further afield using Dublin as their hub connection to North America - and the Far East, Australia and New Zealand with Etihad and Emirates."

Others, particularly in the Irish government, claim that a recent tourist campaign, "The Gathering", aimed at appealing to the worldwide Irish diaspora (including those who claim Irish lineage several generations back), has contributed to the surge in traffic at Dublin airport.

The number of passengers from Northern Ireland taking advantage of the ever-improving road links on the eastern side of the island has definitely played a part.

"Last year 521,000 Northern Ireland passengers travelled through Dublin airport, which is equivalent to almost 30 per cent of the population of the north," O'Kane, a northerner himself, says.

He believes the numbers from across the border will increase next year.

- Observer, AFP

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a5 at 18 Apr 2014 19:21:18 Processing Time: 229ms