Let's stop being so smug about Ireland

There's something unedifying in the way British commentators appear to be enjoying the Irish crisis. Jon Snow tonight repeatedly demanded to know if Dick Roche, Ireland's minister of European Affairs felt "ashamed". Snow neither knew nor cared why Ireland was in a mess or whether the politician he was interviewing was responsible. He had not read the analysis that Roche referred him to in The Independent that said the immediate crisis was triggered by investors withdrawing from Ireland when Germany's Mrs Merkel had a pop at the weaker economies of Europe.  

Nor did Snow listen when told that the Dublin government had done "everything that was asked of it". This is the more prescient point, surely. The Irish government embarked on a programme of extreme austerity measures some time ago that weakened the economy and made it more difficult to meet guarantees to the banks. The Irish were widely praised for their tough approach. which resulted one in 20 people defaulting on their mortgages, making the debt crisis even worse.  No sense of that from Mr Snow. No sense either, that the UK is snapping at the heels of Europe's so-called economic "basket cases" - see table above.

It's time UK politicians and broadcasters stopped being so smug about Ireland. The crisis was caused by poor market regulation, reckless lending on property, and prostration before the markets - which characterise the UK's experience too. Tax-payers in the UK and Ireland are being asked to compensate the bankers for all their losses - with no guarantee that sovereign bankruptcy can be avoided.  We are not "bailing out the Irish" as was suggested tonight on BBC Question Time. We are shoring up the debts of our own irresponsible financial institutions - again.

When David Cameron says Britain would "do it's bit to help" he's not so much being the kindly neighbour as watching his own back.  UK exposure to Irish banks tops £100bn, much of which went of dodgy property speculation. 

Another reason to avoid smugness is that the UK is now following the same disastrous economic policies as got Dublin into this mess. The big difference is that Ireland, as part of the Eurozone, cannot indulge in the Quantitative Easing used to inflate the UK economy and devalue sterling. That will bring its own problems as analyst Nadeem Walayat explains here. The table of countries most at risk of bankruptcy ought to wipe those smirks off the faces of UK pundits. It goes without saying that Scotland has little to gain from being part of this busted flush. The last government statistics showed us to be in surplus even after the UK banking bail-out was taken into account. Far from offering us protection, oil rich Scotland could find itself sinking with the UK ship. Have a look at the maps below which show the UK national debt as a proportion of GDP (UK worse than Ireland) and the government deficit at a proportion of GDP (UK just behind Ireland and ahead of Portugal).

 

 

 

Click on a heading to sort by that measure

 

	Total debt (% GDP)	Total debt (€ m)	2009 deficit (% GDP)
Italy	115.8	1,760,765	5.3
Greece	115.1	273,407	13.6
Belgium	96.7	326,606	6.0
France	77.6	1,489,025	7.5
Portugal	76.8	125,910	9.4
Germany	73.2	1,762,211	3.3
Malta	69.1	3,948	3.8
UK	68.1	1,067,819	11.5
Austria	66.5	184,105	3.4
Ireland	64	104,667	14.3
Netherlands	60.9	347,021	5.3
Cyprus	56.2	9,527	6.1
Spain	53.2	559,650	11.2
Finland	44	75,217	2.2
Slovenia	35.9	12,519	5.5
Slovakia	35.7	22,585	6.8
Luxembourg	14.5	5,464	0.7

 

SOURCE: Eurostat. All figures for 2009

 

 

 

 

Comments

[CHIC McGREGOR]

Labeling National Debt (more commonly known internationally as Public Debt ) as 'Total Debt' is misleading, because Total External Debt, a key indicator used by the IMF is a different thing. TED is used to measure the total debt owed by a country to external organisations whether that debt is public or private.

The definition of public/national debt is largely left up to the national government concerned. It is up to them what they regard as being public or private. That is why the IMF prefers to look at the total which is harder to spin.

The UK National debt is every bit as massaged as one might come to expect from their treatment of unemployment figures, inflation rate etc. by our spin obsessed government.

If you look at the IMF Total External Debt figure the UK is much much worse, the worst in terms of percentage of GDP of the G20.

In absolute TED we are around 10 trillion second only to the USA's 13 trillion (but the USA have 5 times the UK's population). The UK is over 400% OF GDP for TOTAL External DEBT and it accounts for about one sixth of the entire external debt of the planet.

[Neil]

The other point about the bank bailouts which seems to get conveniently forgotten is... if Scotland was to be held responsible for the losses, presumably we would have benefitted from all the tax receipts from these banks during the boom years.

London took all the taxes so London has to pay for the bailout.

[David Farrer]

Here is a scary interview that deals with the UK situation:

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/11/13_Ben_Davies_files/Ben%20Davies%2011%3A13%3A2010.mp3

Our friends down south would see an immediate problem with the GERS Scottish surplus, which allows for "a share of the UK government's banking bailout funding". Read any English site and they'll say than ALL of the RBS/HBoS bailout funding should be attributable to Scotland because their registered offices are here.

There are several points we can make in response. Would an independent England have permitted a foreign bank (RBS) to take over NatWest and so grow so big? Even if RBS had grown so large in an independent Scotland, would the City not have given more support to Barclays (and not to the foreign RBS) in the ABN/Amro take-over battle thus saving RBS? And the big one: What banking regulations would Scotland have had if independent back in 2008?

It's no good for Nats to just say that we'd have done things differently. Given the dominant Keynesian belief system I'd guess that we may well have gone down the Irish road. What a future Scottish chancellor needs to say is that there will be NO bailouts of banks - or of any other private business for that matter. Government guarantees are what have led to this crisis. Until the mal-investments that were caused by the state-supported credit boom are liquidated, there will be no recovery.

[hector]

was it mr cameron who said we are all in this together when referring to the financial crisis.so no problems with helping ireland i would have thought.
nae loss what a friend gets.

[1971Thistle]

I presume those national debt figures exclude PFI debts...that's what they were designed to to do, was keep 'em off the books. So UK is presumably much worse

I agree wholeheartedly with your article - the general Eurozone bashing (centred on Ireland for now) is way over the top. Watching BBC World this morning, they listed seemingly half of Europe as being on the verge of collapse with something resembling glee.

Misplaced schadenfreude

[Jo]

I totally agree about the smugness of the UK about Ireland's present situation. It really is quite disgusting. And clearly selective memory is in operation. We are in a huge mess ourselves. We also had years of irresponsible unregulated lending. And incredibly "experts" are still hoping the economy here will "recover" so that house prices will rise again! Our biggest problem was behaving as if rocketing house prices were the sign of a healthy economy. They are not. Obscene house prices brought self cert mortgages, 135% mortgages and allowed people to borrow six and seven times their annual income! It was madness. The same lenders operated in Ireland and many of them were UK Lenders.
As you've said Joan Ireland did as was suggested and look what they are facing now. Makes you wonder what's ahead of us here in the UK once Osborne's measures start to bite. Perhaps the smug looks will vanish in due course.

[reincarnation]

Good article. Thanks for that.

I tried to refer to it on Blether with Brian, but it looks like you and/or your site may be persona non grata with our revered national broadcaster.