My man in Dublin calls with joy in his voice to tell me ‘the Troika’ — the combined powers of the EU, the European Central Bank and the IMF — have signed off Ireland as fit to leave their bailout programme and return to economic self-determination. This is a remarkable turnaround in just three years since I visited the Irish capital in the midst of rescue talks — to find a nation in shock, staring at an €85 billion emergency loan facility that equated to €20,000 per citizen, a collapsing banking system and a landscape scarred by delusional, never-to-be-finished property developments. In the special Irish way, almost everyone I spoke to told me ‘a bit of luck’ was all that was needed to get them through the crisis — but the outcome has had very little to do with chance and everything to do with knuckling down to the necessity of reform and austerity.
Ireland’s ‘bad bank’, the National Asset Management Agency, has effectively corralled the worst of the property lendings. The surviving banks, having at one point needed €150 billion of EU funding between them, have taken strides to strengthen their balance sheets. The Fine Gael government made deep cuts in spending ordered by the Troika, but maintained relatively attractive corporate tax rates in the face of pressure from the French to make Ireland less competitive as part of the rescue price. Faced by surging job losses, many Irish went abroad to find work, and some eastern European migrants went home: unemployment is high but trending downwards, while inflation has dropped below 1 per cent. GDP growth is only just in positive territory this year, but the European Commission expects 1.7 per cent next year and 2.5 per cent in 2015.
Overall — and despite carping by Nobel laureate doomster Joseph Stiglitz about the bailout mistakes he thinks have contributed to a ‘lost decade’ for Ireland — what’s happened over the water demonstrates to southern Europe the possibility of turning a busted economy around so long as the populace accepts that what went before was folly and that euro membership was never a badge of permanent gilded entitlement. The Irish recovery is also an example of how politicians can win by staying calm and smiling: in December 2010 I described the then opposition leader — shortly to become Taoiseach — Enda Kenny as ‘almost invisible’. But he has come through in such good standing that my well-connected Dublin source says Enda is now worth a bet to succeed José Manuel Barroso as president of the European Commission next year. And perhaps that will be a timely move, because my man adds excitedly: ‘And you know what? The banks are hot to lend again. Property prices are soaring!’
Flying green tax-grab
Flybe has returned to profit against the odds — but at the cost of 500 jobs, having sold all its landing slots at Gatwick, and having said farewell to its chairman Jim French, the man who converted it from tiny Jersey European Airways into the most customer-friendly of the low-cost airlines that have transformed our travel habits over the past two decades. French was a tough manager — standing up to pilots’ demands and ruthlessly rationalising his fleet when Flybe acquired the BA Connect regional operation in 2007. He developed his distinctive operation in the teeth of fierce competition and sniping from both the dinosaurs and the challengers (Ryanair to the fore) of European aviation. Now he seems to have fallen out with the new Flybe management led by Saad Hammad, formerly of easyJet.
But broader than the boardroom backstabbing is the issue of air passenger duty, which hits Flybe particularly hard on its domestic connections. Based on spurious estimates of carbon emissions that it would somehow eliminate, this opportunistic tax-grab on the growth in low-cost air travel — the duty rates were doubled in 2007 — almost certainly does more harm than good in overall tax revenues from tourism and business travel. Now that tokenist green levies are under threat in the energy sector, the Chancellor should be brave enough to review this one too.
Exchange of ideas
The classical frontage of the Royal Exchange above Bank tube station is a friendly landmark to anyone who has ever worked in the City, but I have held back from assembling a Spectator bid for the building because I think it may be cursed. Once the home of Lloyd’s insurance market, its atrium is these days occupied by a fancy restaurant surrounded by luxury boutiques, and a 104-year lease on the whole place is about to be sold for around £80 million.
At its foundation by the financier Sir Thomas Gresham in 1571, the first bourse on the site had the noble purpose of reclaiming for English merchants a portion of the power over London’s import-export trade held by the ‘Lombardy men’ and ‘Alemanes’ who would now be referred to as our European partners. But Gresham’s building burned down in the Great Fire and its successor went the same way in January 1838, on ‘a night of so hard a frost that the very water from the fire engines froze in mid air’. The dignified replacement designed by William Tite survived the Blitz but lost its mercantile purpose after Lloyd’s moved to Lime Street, and eventually became a plaything of real-estate speculators: the sellers this time round include the Irish Bank Resolution Corporation, the vehicle that holds the remains of the failed Anglo Irish Bank and the Irish Nationwide Building Society.
So there’s troubled history here, but still it would be good to see the trading floor of the Royal Exchange reclaimed from bland consumerism and restored to the buzz it must have had in Gresham’s day. Given the rising popularity of live debate as entertainment, perhaps it could become the City’s Speakers’ Corner, with wild-eyed commentators shouting towards the Bank of England across the road, ‘A pox on your forward guidance, Mr Governor Carney! Rates must rise!’ and such like. My soapbox awaits.