Brian spoke about how the US and European economies are lagging, that the new drivers for world growth would come from the developing world and how the US has stormy days ahead with a possible double dip recession.
The anticipated slow growth in the UK and US is worrying as these are Ireland’s major trade partners. It has been well publicised that the Government is planning to make adjustments of €11.8 billion between now and 2015. Unfortunately it looks like lending has and will continue to decline and banks will be constrained for at least 10 more years. Proof of this is the fact that Irish banks turn down credit and investment to high growth companies twice as much as the EU average.
So how did we get here? Well it comes as no surprise that we borrowed too much, paid ourselves too much, lent foolishly to a bubble and allowed taxes become dependent on that bubble. On top of that our competitiveness fell, credit was strangled and leadership was weak. From 2000 onwards Ireland lost its competitiveness through increases in the cost of labour and infrastructure. Proof of this is that the Retail Sales Index had declined by a third since 2007.
However, the economy will recover slowly even though we are growing below our potential with declining real activity and onerous state and personal debt.
Brian feels that Ireland is looking at a lost decade and we will be growing far below our potential. What does this mean for legal firms? There will be declining economic activity for another couple of years but solicitors can head into a brave new world by interacting with other professions to create multi disciplinary professional services companies.