Major confounded by Irish boom

Click to follow
Indy Politics
The Prime Minister's repeated claim that he has created the most successful economy in western Europe is dashed by the facts of the Irish boom.

In the Commons yesterday, John Major said: "We have the most successful economy, with the highest growth and the best inward investment record in western Europe." Other ministers have qualified the Tory election campaign theme, saying that the United Kingdom has the best record of any major industrialised economy - which knocks Ireland out of the running.

But in terms of growth and inflation, two of the key tests of the Conservative claim, the Organisation of Economic Development and Co-operation (OECD) shows that Ireland is doing far better than the UK.

December's OECD "Economic Outlook" says of the UK: "After a period of sluggishness since early 1995, GDP [output] growth picked up in the summer of 1996 ... Output growth is projected to continue to average some 3 per cent per annum from the second half of 1996 until 1998, somewhat above the growth of potential output.

"Unemployment could drop to below 7 per cent of the labour force in 1998, its lowest level in eight years ... inflation is projected to be below 2.5 per cent over the coming two years ... but significant further progress in delivering the planned reduction in public-sector borrowing will be needed to achieve the Government's medium-term balanced budget objective."

While Irish unemployment has remained close to the 12 per cent mark since 1995, Dublin scores better than London on both growth and inflation. The OECD says: "Ireland's economic expansion accelerated in 1995, with output increasing by more than 10 per cent, while inflation remained steady at around 2 per cent.

"The pace of economic activity appears to have moderated to between 6 and 7 per cent in the course of 1996, and is projected to continue in that range until 1998.

"The strong performance so far reflects a rapid rise in exports, led by the high-technology sector, and in domestic demand, particularly fixed investment."

European Commission figures show that while Irish output was two-thirds of the European average in 1990, it is now marginally below average - which is why European regional aid is expected to be slashed for Ireland when the budget is recast in 1999.

Meanwhile, however, the average net European receipt for each Irish household in 1995 was pounds 1,500 - more than twice as much as the Spanish and Portuguese household averages.

As for Tory claims of a new-found, individual prosperity in Britain, Labour employment spokesman Peter Hain said yesterday that the latest government statistics, taken from the Labour Force Survey, showed a 1.2 per cent fall in real earnings for the last three years.

"Throughout the Tory years, well-paid, full-time jobs have been disappearing and in their place have come badly paid, part-time jobs," Mr Hain said.

Comments