The economy is growing fast, unemployment has plummeted and house prices are at a peak. Consumers are preparing for a spending splurge in the run-up to Christmas, but there are stark warnings that we face danger ahead.
Are we showing signs of the excesses of the Celtic Tiger era in the run-up to the 2008 crash?
A team of officials from the European Commission tasked with overseeing the State’s ability to repay loans have reported that “signs of overheating” are building, amid “significant risks” which are “overshadowing the economic outlook”.
Economists warn that we should be paying down our debts and running budget surpluses during this buoyant period, but instead Leo Varadkar’s Government is taking a leaf out of Bertie Ahern’s book and promising tax cuts.
Alan McQuaid, chief economist with Merrion Capital, says: “We are still highly indebted and that leaves us vulnerable to any external shock.”
McQuaid says politicians should be taking away the punchbowl when the party gets started – but they are not doing it, because they see that there may be an election.
This may not be Celtic Tiger part 2, and Central Bank measures may protect us from overborrowing, but caution may be needed to avoid a crash. So what are warning signs?
1 LEO BECOMES THE NEW BERTIE WITH ELECTION GIVEAWAYS
At his party Ard Fheis, Leo Varadkar promised the Irish public five years of income-tax cuts in a €3bn election giveaway that reminded economists of the Celtic Tiger era.
Leo seemed to be channelling Bertie Ahern from a time when the Fianna Fáil Taoiseach said “the boom is getting boomier”.
By raising tax bands over five years, the Taoiseach pledged to bring the rate at which workers start paying the top rate of tax to €50,000 – a giveaway that will cost €600m per year.
“We’ll end this unfairness and allow hard-working people to keep more of the money they earn.”
Back in 2007 at his party conference, Ahern also promised a dramatic cut in income tax before an election. “These tax cuts will reward work, strengthen our economy and promote social inclusion,” he said just a year before the crash. Edgar Morgenroth, Professor of Economics at Dublin City University, said the Government has been narrowing the tax base, and is heavily dependent on corporation tax.
And Prof Morgenroth pours cold water on the idea that the Irish economy is booming. “We think we have a booming economy, but we are not even making surpluses and we are barely breaking even,” he says.
“We should be making surpluses and paying down some of our debt, so that we have more wriggle room. If something happens to corporation tax, which we can’t predict, we will immediately be struggling.”
2 HERE’S JOHNNY! THE PROPERTY BARONS ARE BACK
During the Celtic Tiger era and its turbulent aftermath, bearded property baron Johnny Ronan and his glamorous friends were seldom out of the headlines and the gossip columns.
During the crash, the developer was heavily indebted, with his loans part of Nama, but he is now back on the horse and earning millions.
Recently it was reported that his company, Ronan Group Real Estate, and its funding partners Colony Capital will be paid €600m by Facebook over a 25-year lease to rent out office space.
The deal by the tech giant to rent Fibonacci Square in the heart of posh Dublin 4 is believed to be biggest single letting in Irish history.
In another sign that property barons reign supreme, the scoreboard at the recent Ireland-All Blacks game was sponsored by Ballymore Properties, the firm run by Sean Mulryan. And the property baron is also sponsoring the Dublin Fringe Festival.
3 CHRISTMAS SHOPPERS TAKE TO MANHATTAN AGAIN
If it’s late November, it must be time to take in a bit of Christmas shopping in the Big Apple.
That was the craze during the Celtic Tiger period, and shoppers are again flying to New York to max out the credit card in Macy’s, Bloomingdale’s and Woodbury Common. Polly Bond of Tour America tells Review: “Packages for Christmas shopping in New York booked out early on, and are up by 12pc this year.”
4 EVERYBODY’S TALKING ABOUT THE TRAFFIC
Radio listeners have again turned their attention to AA Roadwatch announcers as motorists spend hours in endless traffic jams.
Across the entire country, there are now 200,000 more cars on the road than there were in 2011. Traffic on national roads increased by 6pc last year, with the M50 the country’s busiest road and the South Ring Road the most heavily used in Cork.
Conor Faughnan, director of consumer affairs at the AA, says commuter times for many motorists have increased as people move further from Dublin to avail of cheaper property.
“We are now repeating the pattern of the Celtic Tiger era and many of the same mistakes with planning and land use.
“If you build a housing estate in somewhere like Naas instead of building a high-density development inside the M50, it stores up huge trouble.”
According to Faughnan, the M50 is now busier than it has ever been.
5 WEDDINGS ARE LIKE A MINI-ELECTRIC PICNIC
Over-the-top weddings are all the rage once again, as couples turn their nuptials into a mini-Electric Picnic.
Celina Murphy, deputy editor of the wedding website Onefabday.com, says typical Irish weddings are now costing €30,000 – much more than their grandparents would have paid for their house. And the website estimates the cost of attending a wedding at €800 – and you can double that if it involves a stag or hen do, which may happen abroad.
“Many weddings now go on for three days. There is a party on the evening before, and frequently a full party the day after,” says Celina.
“It is increasingly common for brides to have two dresses – one is spectacular for the ceremony and the other is comfortable for the reception. We recently covered a wedding where the bride spent €13,000 on wedding dresses.”
According to Murphy, it is also common for weddings to have two bands playing. They may also have ice cream vans, crêpe stations and wood-fired pizza stalls as well as the wedding banquet.
Whereas, couples used to supply half a bottle of wine per guest, they now give them buckets of craft beer, rounds of cocktails and Prosecco.
Murphy says she knows of one couple who spent €7,000 on the bar tab in a country house hotel and the total bill came to €75,000.
6 €550 RENT TO SHARE A BED
Back in 2007, the economy overheated because of soaring property prices and huge property loans. Professor Morgenroth says it is now overheating because of soaring rents – and many tenants are overstretched.
“They are vulnerable to any kind of shock with these high rents if their income comes down,” he says.
This week it was reported that renters are being asked to pay €550 a month for the privilege of sharing a bed with another person in Stoneybatter in Dublin.
The advert, offering a king-size bed with an en-suite, was searching for a “female to share the room with another female student”.
In another case, a landlord in Sutton tried to rent out a garden shed tacked on to the side of a house for €700 per month.
7 OPULENT CAFÉ EN SEINE REOPENS
The bar on Dawson Street was a Celtic Tiger hotspot for those with money to burn. This week it has been reopened after a €4m revamp.
As well as modelling itself on a swish Parisian brasserie, the building features a street garden with a retractable roof that aims to create the feeling of being at an outdoor table on a Parisian boulevard.
With cocktails costing €13, a round of drinks will not leave much change from €50.
Elsewhere in Dublin city centre, the Quirke family, owners of the amusement arcade Dr Quirkey’s Emporium, have just opened the swish art deco-style Carlton Casino on O’Connell Street.
8 COUNTRY GOES BARKING MAD OVER PETS
Dog owners now seem to be spending just as much pampering their pets as on their children. A property on Garville Road in Rathgar recently went on sale for €1.45m, boasting a “heated dog shower” as a feature.
The Twelve Hotel in Galway has a pet concierge service, pet menu, and doggy room service. There has also been a boom in dog spas, and organised parties for pooches in case they feel they are missing out on the canine social scene. Barker and Bowes in Annacotty, Co Limerick, offer a ‘Puppy Party’ service to “help you celebrate your canine’s special day”. It includes a pawsecco fountain and organised games.
9 EVEN THE GREYHOUNDS ARE ON COCAINE
Party people are dreaming of a white Christmas as cocaine seizures are back in the news.
The Cross Border Organised Crime Threat Assessment report for 2018 recently predicted that Irish cocaine use is likely to hit its 2007 peak.
In a recent seizure, a total of 66kg of cocaine destined for the Irish market with an estimated street value of €4.6m, was intercepted in Rosslare. And there was shock in the world of dog racing when champion greyhound Clonbrien Hero tested positive for the Class A drug.
10 SUVs BACK IN VOGUE
New car sales may be flat, as imports from Britain soar, but the favoured car of the Celtic Tiger era is back in vogue.
New Sports Utility Vehicles (SUVs) and jeeps are again clogging up the streets and are the most popular cars on the road. Sales of standard SUVs and jeeps have surged by 17pc to 43,000 this year, according to figures from the Society of the Irish Motor Industry.
Luxury SUVs, the legendary Dalkey Tractors of Celtic Tiger lore, are also popular again with sales surging 21pc this year.
Overall, one-third of cars are bought through Personal Contract Plans (PCP), a form of hire purchase where the motorist does not own the car until the final payment.
Motorists pay a deposit, a series of monthly payments over three years, and then a final “balloon payment” of up to 30pc of the price.
A recent ESRI study showed that many buyers do not understand how PCPs work.
With sterling weak, many motorists are avoiding new cars and importing luxury second-hand status symbols from the UK.
Sales of imported BMWs are up 35pc, while the flash Mercedes is also popular with an increase of 37pc.
11 NEW APARTMENT BLOCKS WITH A CONCIERGE
You need someone to deal with all your Amazon orders for designer gladrags in the pre-Christmas shopping rush. Why not phone the concierge?
Pricey new apartment schemes come with a concierge to give the place a feel of a five-star hotel. Among those offering the service is Kennedy Wilson’s new Capital Dock residential scheme, with two-bedroom units being advertised at €3,300 a month.
A similar service is available at Lansdowne Place, the swanky apartment scheme on the site of the former Berkeley and Jury’s hotels in the heart of Dublin 4.
One of the penthouses in the scheme recently sold for €6.5m before it was even built. Both developments come with cinemas and gyms.
12 FOREIGN WORKERS NEEDED TO BUILD HOUSES – BUT THERE’S NOWHERE FOR THEM TO LIVE
The ESRI this week said Ireland will need an influx of foreign workers to build houses, but also warned that inviting these workers over may add to rental pressures and boost housing demand.
Latest figures show a 14pc jump in the number of people working in construction in the past year. DCU economist Edgar Morgenroth says: “We need to avoid a situation where employment in our domestic economy is driven by construction, retail and the public sector. That is unsustainable.”
13 CONSUMERS GO DOUGHNUTS OVER KRISPY KREME
The country was in the grip of doughnut mania last month as hundreds of motorists queued and honked their horns in the middle of the night after the opening of a Krispy Kreme outlet.
From their first day there were massive queues of people waiting to try out our newest doughnut company. It was so popular that Krispy Kreme had to close its drive-thru after 11.30pm after noisy customers woke up neighbours.
14 PRIVATE SCHOOL SMASHES FEES RECORD
Fee-paying schools were hit during the recession, but many have recently reported an increase in enrolments.
Nord Anglia International Dublin, which opened its doors in September, broke the fees record, charging a whopping €24,000 per year for day pupils. As well as the children of executives from multinationals, it hopes to attract Irish families seeking a “premium” education.
Numbers at St Columba’s College, the most expensive boarding school in the State with fees of up to €24,000, were reported to have risen recently.
15 NEVER MIND CLIMATE CHANGE – WE’LL JUST PAY THE FINES
The Government talks a lot of hot air about climate change, but the attitude seems to be: “Oh Lord, make me pure – but not yet!”
Pledges to deal with the environmental threat have proved to be little more than greenwash, and the Government avoided the politically difficult task of hiking carbon taxes in the budget.
Taoiseach Leo Varadkar admitted Ireland will miss EU carbon-emission reduction targets for 2020 and could face having to pay hundreds of millions of euro for credits.
Like the rich SUV driver ignoring parking restrictions and speeding fines, Ireland has ignored the penalties, and the Taoiseach told the Dáil that Ireland hopes to meet carbon-reduction targets for 2030.
16 DUBLIN AIRPORT IS CHOCKABLOCK
The airport is crowded at any hour of the day as holidaymakers rush away for a winter sunshine holiday, or to take in a bit of skiing.
Pat Dawson, chief executive of the Irish Travel Agents Association, says up to 32 million passengers are expected to have travelled through the airport by the end of this year, smashing last year’s record. That is up from 19 million during the recession.
Tokyo is expected to turn into Dublin 4 central next year as well-to-do rugger-bugger alickadoos book packages to the rugby world cup in Japan for up to €20,000 each.
17 TIPPLERS HAVE CHAMPAGNE BOTTLES OPENED WITH A SWORD
Who can be bothered pulling the cork off a bottle of champagne nowadays, when the waiter can swipe off the top with a sword?
The swashbuckling sabre method of opening champagne bottles is de rigueur – and the service is now offered by staff at the Shelbourne Hotel.
Elsewhere in the capital, the hospitality industry has certainly regained its fizz with swanky new bars charging extravagant prices opening every month. In the city’s plusher fleshpots, customers commonly pay in excess of €12 for a cocktail, frequently served in a large round glass and packed with ice. Pints of beer now commonly cost over €7.
18 FINE GAEL SLOGAN IS ECHO OF BOOMTIME FIANNA FÁIL
Our Blueshirt overlords were cockahoop at last weekend’s Ard Fheis, convinced that they can rule for 1,000 years in an era of never-ending prosperity.
Keen followers of Irish politics would have noticed the Fine Gael slogan used as a backdrop for the speeches: “Fine Gael – Taking Ireland Forward Together.”
This bore a distinct resemblance to the Fianna Fáil call to arms at the 2007 general election during the bubble era of Bertie Ahern: “Together let’s take the next steps forward.”
In the case of Fianna Fáil and the Irish economy, the next step was over a cliff. Will it be repeated with Leo and co?
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