Galway Chamber and NUI Galway last night (Monday, 18 January) hosted the third Paddy Ryan Memorial Lecture. This event, which alternates between the University and GMIT, honours the memory of the late Paddy Ryan.
Dr Alan Ahearne, Special Advisor to Mr Brian Lenihan T.D., Minister for Finance, was the guest speaker at the event which was held at NUI Galway and attended by some 500 people. Currently on a leave of absence from positions at NUI Galway and at Bruegel, the influential Brussels-based economics think tank, Dr Ahearne gave his view on the country's current economic situation in a lecture entitled 'Between a Rock and a Hard Place: Policy Making in a Time of Economic Crisis.'
A number of factors are starting to fall into place to ensure that economic growth can be anticipated in 2010, according to Dr Ahearne. He said that 2009 was a year for stabilisation and that the measures taken last year should result in growth later this year.
According to Dr Ahearne, a number of factors gave rise to such optimism. He said there was a 5% improvement in unit labour costs in Ireland since the autumn. The unit cost in Ireland dropped 2% in Ireland last year at a time when they increased by 3% in the Euro area.
"This is already kickstarting growth. We are starting to gain market share but we need to do more as we lost our competitiveness during the boom years," said Dr Ahearne.
He said that export-led growth would be the engine for the recovery but that it would probably be 2011 before real impact would be felt, after years of over-dependence on house building.
"We are on the road to recovery but it will be a bumpy road. It is still an uncertain world and the financial markets are fragile. "Unemployment is still increasing, although the rate has slowed down," he noted.
He said that as firms expand in the recovery it was crucial banks could provide credit, so sorting out the banking sector was key to this.
"There needs to be a proper sequence of events and that is what is happening. Around €19billion will be transferred into NAMA next month and that first transfer will give us a lot of information," he said.
Dr Ahearne said that the remainder should be transferred by the end of September and that the cost of recapitalising the banking sector would become apparent in between.
He said that when the 'risky' loans were gone off the balance sheet and the banks were recapitalised, the banking sector would be well able to meet the needs of the economy. Dr Ahearne dismissed suggestions that banks should default on bondholders.
"The bulk of bonds in Irish banks are ordinary senior bonds. They are part of the banks' funding and not risk capital. They are owned by pension funds, insurance companies, credit unions and other long-term providers of funds," said Dr Ahearne, who added that, in any event, such bonds were covered by the Bank Guarantee scheme.
Dr Ahearne and the Paddy Ryan Memorial Lecture was introduced by NUI Galway President, Dr James J. Browne. He said that people in Ireland today owe an enormous debt of gratitude to Paddy Ryan and to his generation.
"Paddy Ryan and his peers worked to build the modern Ireland. He will be remembered for his contribution to Galway's business and civic life and as an exemplar of the nation-builders of the 50s, 60s and '70s.
"Like many of his generation, he believed in 'giving something back'. He had a strong sense of responsibility towards helping those less fortunate.
"In many ways, he embodied what is nowadays referred to active citizenship and social responsibility," said Dr Browne.
President of Galway Chamber Mr Paul Shelly presented Dr Ahearne with a specially commissioned medal designed by the artist and sculpture Padraic Reaney following his lecture. The medal was sponsored by Schneider Electric IT Logistics Europe (formerly APC).
The Paddy Ryan Memorial Lecture alternates between GMIT and NUI Galway. Paddy Ryan was a former Mayor of Galway who was a successful businessman in the city until his death in 2004.
Dr Ahearne's presentation can be viewed at http://www.nuigalway.ie/about-us/video/paddy-ryan-memorial-lecture.html