Consumer Confidence – The difference between the CELTIC TIGER and the celtic kitten

I was thinking about the Irish as a race and if there is one characteristic that I think epitomizes the character of Irish people it is optimism in the face of adversity. During the tiger years we were all happy to take big risks, incur debt in an ever rising market, buy property and expect the spiral to continue forever. Misplaced Optimism.

Now all we see and hear about are failed banks, higher taxes, doom and gloom everywhere. This is the excessive pendulum swing in the opposite direction. Misplaced Pessimism.

Where is the balance?

Here are 6 Facts and my conclusion.

Fact 1. If lots of people lost lots of money at the crash someone made a profit. There is money out there. (All these billions are going somewhere)

Fact 2. 84% of people still have jobs with 85% of their tiger salaries.

Fact 3. If the people with the jobs spent an extra €10 per week on discretionary spend that would pump €16m per week or €8.3bn a year back into the economy.

Fact 4 Ireland is a member of the Euro Currency and we received over €1.6Bn in subsidies and grants from the EU last Year. And will get the same this and next year. That makes Europe very committed to Ireland. That would generate €1.5Bn in VAT, about 20000 jobs in retail and services and the resulting tax boost. Extrapolate That.

Fact 5. Irish GDP dropped by 20bn since 2008 (back to 2006 levels) So did most prices and house values. €20 a week from all of us would almost restore us to 2008 levels

Fact 6. Many people in this economy could still spend €50 or €100 extra a week and not miss it

Conclusion: Ireland, That is the people of Ireland can re build the Irish Economy by not subscribing to this super negativity. Caution is fine but not to extremes. If we just spent normally it would increase the tax take through indirect taxes instead of direct ones like the social charge; increase economic activity, create jobs and the feel-good factor would return in a more measured way.

I am asking for as much feedback as possible to this article. Re tweet it so that as many people as possible have a chance to add their voice to this discussion

Even if you don’t agree then say so and let’s start a different type of economic discussion. Anything is better than sitting on our hands. We have been doing that for 3 years now and it doesn’t work.

Peter Cronin welcomes comments on this article businessdoctor@alaymont.com Follow me on Twitter: twitter.com/business_dr