THE IRISH ECONOMY

During the last couple of days, I have been over in Dublin acting as an external assessor for the Irish Research Council for the Humanities and Social Sciences and meeting up with a couple of Irish organisations to discuss potential opportunities for Welsh firms (more on that later).

It was a historic time to be in the capital city as my visit coincided with the announcement of the Irish Government’s attempted rescue plan to save Ireland’s economy.

In some sections of society, feelings are running high and headlines such as those in the Irish Star (left) makes critiques of the UK Coalition Government seem very mild indeed.

The severe cuts equate to more than ten per cent of Ireland’s national income, compared with Britain’s plan to reduce public spending by about five per cent of output.

Indeed, given the recent fuss over the reduction in the Welsh Assembly Government’s budget, it is very sobering to read what is having to be done across the Irish Sea to stabilise their economy::

• €15bn in measures aim to bring deficit under 3% GDP by 2014 with €6bn of adjustments to be front-loaded in 2011
• An extra €1.9bn sought via income tax changes
• Standard VAT rate to rise from 21% to 23% in 2014
• Entry point for income tax to fall to €15,300 – from €18,300 currently – by 2014
• Minimum wage to be reduced by €1 to €7.65
• Reduction of social welfare spending of €2.8bn targeted
• Domestic water charges to be introduced by 2014
• Introduction of a site value tax in 2012
• Students' contribution charge to rise from €1,500 to €2,000
• Reform of capital acquisitions, capital gains tax
• Pension-related tax changes to yield €700m
• Tax savings of €240m on public sector pension deductions
• Site valuation tax to be introduced
• Cut in public service staff by 24,750 from end-2008 levels to 2005 levels
• Overall pay adjustments of €1.2bn by 2014
• 10% pay cut, new pension scheme for new public sector entrants

However, the plan does not touch the country's low corporate tax rate which was one of the major contributing factors to the economic boom during the 1990s. This is despite pressure from Germany and France to abolish the 12.5 per cent rate of corporation tax which has attracted major companies such as Google and Microsoft to Ireland.

In terms of what this all means to Irish citizens, the Irish Independent has estimated that the average household will be paying an additional €4,600 every year in extra charges and taxes. Still, when I popped over to Slattery’s for a pint of Guinness last night, it was full of craic and there was little gloom and doom amongst the clientele.

Of course, whether that will be the case in 12 months time is another matter, but if there is one nation that can bounce back from this economic catastrophe, it is the Irish.