herald

Sunday 19 August 2018

Dan White: I hate to say it but i was right ... once again

This time last year the Herald predicted what was to come in a hard 12 months

2010 was a year like no other as the economic blows rained down thick and fast. Did anyone see it coming? We look back on our top 10 predictions for 2010 and see how they measure up.

1 PUBLIC SECTOR NUMBERS WILL BE CUT

Bang on. In its four-year economic plan published in November, the Government announced that it would cut public sector numbers by 25,000 over the next four years.

2 WELFARE RATES WILL BE CUT EVEN FURTHER

Right again. Most social welfare rates had been cut by 4pc in the December 2009 Budget, and in the December 2010 Budget the Government cut all social welfare payments, except pensions, by another 4pc.

3 MINIMUM WAGE WILL BE CUT

Precisely what came to pass. The Government cut Ireland's minimum wage of €8.65 per hour, the second-highest in the EU, by €1 to €7.65 per hour in the December 2010 budget.

4 INTEREST RATES WILL START TO RISE

Four out of four. While the ECB left its official rate, currently at an all-time low of just 1pc, untouched, all of the Irish-owned banks increased the interest rates which they charge their customers, with both AIB and Bank of Ireland jacking up their variable-rate mortgage rates by 1pc.

5 HOUSE PRICES WILL CONTINUE TO FALL

Alright, this is getting downright creepy! The most recent Permanent TSB house price index show that house prices fell by a further 15pc in the year to October 2010. This means that house prices have now fallen by a massive 36pc from their late 2006 peak. So, right again.

6 A SPANISH BANKING CRISIS WILL TRIGGER THE MOMENT OF TRUTH FOR THE EUROZONE

In the event it wasn't a Spanish bank crisis that triggered a moment of truth for the eurozone, but an Irish bank crisis. By the end of the year, not only had the escalating cost of bailing out the Irish banks bankrupted the state, it had also brought the single currency to brink of destruction.

7 THE EURO WILL FALL AGAINST STERLING AND THE DOLLAR

It did. By the end of 2010 the euro was 8pc lower against the dollar and 5pc lower against sterling. The fall in the value of the euro against both the dollar and sterling is one of the main factors driving Ireland's export-led recovery.

8 THERE WILL BE JUST THREE IRISH-OWNED BANKS LEFT BY THE END OF 2010

Okay, so that hasn't happened ... yet. But with Anglo Irish set to disappear shortly and Brian Lenihan having taken sweeping powers to restructure the Irish banking system, stand by for a massive culling of the number of Irish-owned banks in 2011.

9 EITHER OR BOTH AIB AND BANK OF IRELAND WILL BE IN MAJORITY STATE OWNERSHIP BY THE END OF 2010

On December 23, Brian Lenihan went to the High Court to force AIB to accept €3.7bn of fresh capital, increasing the state shareholding in the bank from 18pc to almost 93pc. With Bank of Ireland also having to raise more capital to meet the Financial Regulator's new, more stringent standards, most analysts expect the state shareholding in Bank of Ireland to rise from its present 36pc to over 50pc early this year.

10THE ECONOMY WILL BEGIN TO RECOVER IN 2010

The most recent figures from the CSO show that the Irish economy grew in the third quarter of 2010, for the first time since the final quarter of 2007. That's the good news.

The bad news is that the economic growth has been confined to the export sector with little impact on employment or incomes in the domestic economy.

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