jim power new ideas conference march 2009
TRANSCRIPT
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NEW IDEAS CONFERENCE, LIMERICK.
Jim Power, Chief Economist, Friends First25th March 2009
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The Irish Reality
• Economy in deep recession• Public finances deteriorating rapidly• Labour market deteriorating rapidly• Banking system still in a very uncertain place,
despite re-capitalisation & nationalisation• Confidence in leadership fragile• Lack of understanding of realities of EMU
membership - wages v fiscal policy• Confidence generally very poor across economy• Social Partnership model struggling to cope• Image of Ireland has been badly tarnished
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Ireland - Unemployment
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Sectoral Labour Market Changes
Sector Change Q4 07 to Q4 08Agriculture F&F -2,700Other Production -12,400Construction -45,900Wholesale & Retail Trade -18,200Hotels & Restaurants -10,500Transport, Storage etc +900Financial & Business Services -11,600Public Admin. & Defence +600Education +6,300Health +3,500Other services +3,100Total -86,900Source: CSO
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Irish Economy in 2009
• Will be a very difficult year• Unemployment will rise a lot further• Public finances will get a lot worse• Consumer dynamics will be difficult• Housing correction has further to run• Prospects for recovery in 2010 contingent on
credit availability, international recovery, bottoming of housing market,
• Competitiveness has to be the focus• All risks on downside at the moment
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Ireland Economic Forecast
Average 2008e 2009f 2010f
GDP -2.0% -4.5% -2.0%
GNP -2.5% -6.6% -2.0%
Consumption -2.0% -6.5% -3.0%
Investment -20.0% -25.0% -10.0%
Government 3.0% 0.0% 0.0%
Exports 2.0% -1.0% 1.5%
Imports -2.0% -5.0% -1.0%
Consumer Price Inflation 4.5% -3.0% -2.0%
Unemployment (average) 6.3% 12.5% 14.0%
e=estimate f=forecast
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LIMERICK & THE MID-WEST
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INDEX OF DISPOSABLE INCOME PER PERSON
80.0
85.0
90.0
95.0
100.0
105.0
110.0
115.0• Limerick 0.3%
above national average
• Limerick -10.7% behind Dublin
• Limerick 1% ahead of Cork
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INDEX OF DISPOSABLE INCOME PER PERSON
80
85
9095
100
105
110115
• Mid-West 3% behind national average
• Mid-West 0.6% ahead of South West
• Mid-West third highest region
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60708090
100110120130140150
INDEX OF GROSS VALUE ADDED PER PERSON
• Mid-West 13% behind national average
• Mid-West 25.8% behind South-West
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Live Register Trends
BMW +51,726 +86.3%
Dublin +37,953 +85.1%
Mid-West +14,617 +87.3%
South-West +22,988 +86.9%
South-East +20,648 +81.2%
State +164,952 +87.1%
Limerick +8,219 +91.3%
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Employment by Sector
SECTOR MID-WEST NATIONAL AVERAGEAgriculture
F&F7.6% 5.5%
Manufacturing
17.5% 13.9%Construction 13.2% 13.2%Wholesale & Retail
15.1% 14.5%Hotels & Restaurants
5.8% 6.1%Transport etc 6.2% 5.7%Financial & Other Business Services
9.4% 13.8%
Public Admin. & Defence
4.4% 5.2%Education 6.7% 6.1%Health 8.8% 10.2%Other Services
5.3% 5.8%
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Vulnerability of Mid-West
• 33.8% of Labour Force in Construction/Agriculture/Manufacturing
• 32.6% for economy as a whole• 3 sectors now under pressure• Lower level of Financial & Business Services• Planned construction activity positive for Limerick• Will need to be heavy focus on high-level
employment creation in Limerick region
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Population Change
•Change in population a key social & economic indicator•Limerick City appears to be doing poorly, but•Boundary Division distorts the real picture
COUNTY/CITY
2002 2006 % CHANGEState 3,917,2
034,239,848
+8.2%Galway 209,077 231,670 +10.8%Cork 447,829 481,295 +7.5%Waterford
101,546
107,961
+6.3%Limerick City
54,023 52,539 -2.7%
Limerick County
121,281
131,516
+8.4%
Limerick
175,304 184,055 +5.0%
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Average House Prices
•Supply has been limited so prices holding up relatively well•According to D.o.E New House Prices in Q3 2008 -5.0% in Limerick, -5.5% Whole Country, -15.8% Dublin, -3.6% Cork, 0.0% Galway -0.9% Waterford•According to D.o.E 2nd Hand House Prices in Q3 2008 -9.4% in Limerick, -10.3% Whole Country, -15.8% Dublin, -10.2% Cork, -15.7% Galway +5.9% Waterford
NEW Second HandNational €301,680 €335,762
Dublin €347,233 €412,152Cork €320,302 €334,663Galway €281,177 €310,865Waterford €290,357 €301,387Limerick €271,161 €263,793
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Vision for Limerick City
• City in middle of a major regeneration programme that will totally transform face of city
• Lots of vision• EML Architects• The Atlantic Way• Limerick Docklands Initiative• Murray O’Laoire Architects
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Public Initiatives for Limerick
• Transport 21• Limerick City Council Draft City Centre
Strategy – ‘ allow easy access to city centre by public and private transport, to park safely and conveniently and move safely and easily on foot through places of enhanced environmental quality’
• Regeneration Project – major economic & social plan
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Private Sector Initiatives
• Considerable interest by private sector in developing Limerick City
• The Opera Centre €500 million development
• Arthur’s Quay €500 million project• These development will utterly transform
face of Limerick City
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What has Limerick Going For it?
• Close proximity to international airport• High quality educational offering• Affordable housing market• Strong offering in Arts & Culture• City Council that is open for business• Transport 21 is opening up city• Regeneration project• Shannon Development Agency• Strong Private & Public Sector commitment• Strong sporting offering
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What Needs to be Done
• Heavy dependence on sectors under pressure, need for very pro-active employment policy
• Sort out Governance Structure to create shared vision
• Avoid pitfalls in regeneration• Official vision needs to be shared by all
stakeholders and realised• Improve tarnished image
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THE ROAD TO NATIONAL RECOVERY!
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Conditions for Recovery
• International economic cycle needs to improve
• Stabilisation of housing market• Solution to banking crisis• Exchange rate improvement• Fiscal certainty• Competitiveness
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Competitiveness
• Cost base of economy needs to fall• Focus on outputs rather than inputs in public spending• Lower cost of housing• Lower fuel & energy costs• Lower local authority charges• Focus on quality of labour force• IT capability• Broader tax base, low marginal rates• Proper regulatory framework• Functioning banking system• External image of Ireland
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Strategic Vision
• Small Open Economy - never forget it!• Focus on Quality rather than Quantity• Pick sectoral winners• FDI• Agri-Food• Tourism• Service exports• R&D• IT as a solution provider• Labour market flexibility• Effective anti-corruption laws & enforcement• Effective regulatory institutions• The Washington Consensus
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Final Thoughts
• Strategic vision required• A new vision for capitalism - ‘Entrepreneurial
Capitalism’ significant role played by small innovative firms
• Strong effective leadership• Promotion of entrepreneurial culture• High quality economic growth the only way to solve
fiscal and labour market crisis!• Quality of labour force key• No silver bullet - but we have to make it happen
rather than wait for it to happen
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