A bailout for Ireland would be a positive move for the country, economist Jim Power said today.
Speaking at the launch of Friends First’s quarterly economic outlook, the insurance company’s chief economist said he fully supports the bailout. “I am more optimistic about Ireland today as any stage over the last couple of years” he said.
However, Mr Power said that he did not support the option of a mortgage debt write-off which he estimates may cost €10 billion.
Arguing that the country could not afford it at the moment, he said that the loans could be kept on the balance sheets of the banks as non-performing assets, where they would not accrue any interest. Those loans could then be revisited in five years time, when a write-off could be considered he said.
According to the economic outlook, the housing and mortgage market will remain weak in 2011, with house prices likely to fall by another 4 per cent next year, in addition to the 10 per cent fall forecast for this year.
Among the options to be considered in the forthcoming budget should be a property tax, the introduction of water charges, an increase of 2 per cent in the standard rate of tax and a cut in public sectors. Mr Power also advocates a cut in social welfare. “Almost all workers in the economy have already experienced wage cuts and tax increases, with more to come. Social welfare recipients cannot remain immune to these forces, particularly given the size of the social welfare bill.”
A tax on child benefit and a reduction in rates for third and subsequent children, should also be considered he said.
