Merciar Business Consulting

Ireland's economy faces three years of declining output

The Irish economy is already in a deep recession and it now appears almost certain that activity will continue to contract over the next two years. Unemployment is rising sharply and is forecast to increase even more rapidly in the early months of 2009. The severe downturn is mainly attributable to declining domestic demand, led by a collapse in construction activity and falling consumer spending, but is being compounded by the unprecedented developments in international financial markets. The two-party coalition government is also grappling with a self-inflicted fiscal crisis, and evidence to date does not suggest that it is rising to the challenge either politically or from a policy-making perspective.

Ireland's economy is moving more deeply into recession, and recent data point to a widening of the slump. Retail sales figures have shown a deteriorating trend since the start of 2008, with sales volumes declining by 0.2% in the first quarter, by 4.5% in the second and by 5.7% in the third—data for August and September were the weakest in 25 years. Unsurprisingly, housing-related retail subsectors have been worst hit. In the year to August, sales volumes in the furniture and lighting category were down by 20%, while those of hardware, paint and glass were down by 14.2%. The most recent month for which comparable EU-wide retail sales data are available is July, when Ireland's decline of 5% compared with an average fall of 0.5% across the EU and of 1.8% across the euro area. ...

Peace brought Romanticism to 19th-century Holland

THE stolid, clog-wearing, cheese-making Dutch are not your obvious Romantics. But when Holland gained independence in 1813, after decades spent fighting the French, a resolute high-mindedness that was thrifty, intimate, idealistic and in its way peculiarly Dutch, finally settled on the Low Countries.

These good people had no time for the high Romanticism of the Germans, who hankered after the lances and legends of the Middle Ages, or the leafy ideals of the English with their love of daffodils and the bucolic greenery of the Lake District. ...

A jump in mentions of “deflation” in news stories

ONLY a few months ago, inflation was the main concern of central banks as the price of oil and other commodities soared. Deflation was not only unthinkable but rarely mentioned in the press. Back in August, only six stories in the Wall Street Journal, International Herald Tribune and the Times mentioned “deflation”. In November, there have already been 50, and new figures released this week will mean many more. America's consumer-price index fell by 1% in October from September as oil prices plunged, the largest monthly fall since the series began in 1947. Britain's inflation rate has also fallen from its record high of 5.2% in September to 4.5% in October, the biggest drop in 16 years.

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It’s official (nearly): Iraq’s government wants America’s army out by the end of 2011

WHEN General David Petraeus, now America’s most celebrated military commander, arrived in Iraq in 2003 at the head of an airborne division, he asked a journalist: “Tell me how this ends?” For years nobody had a good answer. But now, thanks to a military pact between America and Iraq, a conclusion is in sight: America’s war in Iraq will end in three years’ time, with American troops being shown the door and Iraqi politicians competing to claim credit for getting rid of the foreigners.

A “withdrawal agreement” approved by the Iraqi cabinet on November 16th requires American troops to pull out of Iraqi towns and cities by the end of June next year, and to leave Iraq altogether by December 31st 2011. Those deadlines, said Iraq’s prime minister, Nuri al-Maliki, in a televised address, would not be extended. The deal was not perfect, but marked “a solid start for Iraq to regain its full sovereignty in three years.” ...

If Detroit’s disintegrating carmakers are bailed out, Europe’s will be next in line

IT IS not just in Washington, DC, that a fierce debate is being conducted about whether to provide state aid to the beleaguered car industry. On Tuesday November 18th, just as the bosses of General Motors (GM), Ford and Chrysler were lining up with their begging bowls before the Senate banking committee, the directors of the European Investment Bank, the European Union’s lending arm, were considering whether to give Europe’s carmakers €40 billion ($51 billion) in soft loans. The previous day, the German chancellor, Angela Merkel, had met executives of GM’s European subsidiary, Opel, to discuss guaranteeing a €1 billion liquidity line in the “worst case” of its parent company in America going bankrupt.

Despite the appearance of similarity on both sides of the Atlantic, however, there are big differences. For one thing, the plight of the Detroit Three is much more urgent. GM’s boss, Rick Wagoner, told the senators that the economy faced “catastrophic collapse” if bridging loans were not quickly made available. He gave warning that by the end of the year, GM might not have enough money to pay its bills. Ford’s cash position is stronger—company insiders reckon that it might just be able to scrape through on its own resources—but its chief executive, Alan Mulally, was not on Capitol Hill just for the ride. He fears that if either Chrysler or GM (particularly the latter because it is so much bigger) were to fail, the impact on the parts suppliers on which all three firms depend could bring down Ford as well. ...