The economy recorded another strong performance this year and the omens are good for 1997. Economic activity is expanding rapidly and job numbers continue to rise. By international standards the performance of the economy over the past couple of years has been extraordinary, with Ireland far and away the fastest growing state in the EU.
There is a real feeling of confidence in the economy which has grown over the past year. This is reflected in strong growth in consumer spending and business investment. The latter is particularly important, as it builds the foundation for growth in the years ahead by improving the economy's productive capacity.
The big investments that grab the headlines have tended to come from multinational industry. There has been a string of major announcements this year, mostly in the electronics and tele services sectors. The news earlier this month that IBM is to establish a 2,850 job facility in West Dublin ended with a major success, what was already a good year for IDA Ireland and the Minister for Enterprise and Employment, Mr Bruton.
But, just as important, investment has been strong across other areas of the economy. The construction sector has had a good year, retailing is booming and many indigenous manufacturing businesses are developing steadily. The Business This Year section, published with today's editions of this newspaper, chronicles the successes of the year, which has seen the workforce grow to 1.284 million people - the largest since the foundation of the State. It also looks at sectors which have faced some difficulties, such as the beef industry.
When times are good, a priority must be to try to build on success and ensure that the foundations are secured for further achievement. This is a difficult task for the Government which must adjudicate between competing demands for a share of our recent economic success, as well as keeping an eye to future challenges that face the economy. Approaching an election, the danger is that too much will be promised and too little attention paid to the longer term.
The Government will plead that it continues to act responsibly. The level of exchequer borrowing, after all, remains one of the lowest in the EU as a percentage of national output. Also, a new national agreement has just been concluded as the social partners attempt to replicate the conditions which have led to recent economic success.
However, there is a risk that all our economic plans are being laid on the basis of a continuation of the exceptional growth rates of recent years. Exchequer borrowing may be lower than our EU partners, but with growth here running at two to three times the rate of most other economies, the risk is that the public finances will face pressure if the economy slows.
The new national agreement - Partnership 2000 - contains much that is welcome. But it does not display any evidence that the Government is getting to grips with public spending. Here the problem is not the money given towards helping the less well off in our society, but another public sector pay agreement which will put pressure on overall current spending over the next three years. In negotiating the agreement, the Government does not appear to have received any cast iron guarantees in relation to reform of the public sector, in return for the pay rises.
Worryingly, the new agreement also makes only passing reference to monetary union and to the new demands this will impose on the economy. Economic performance next year will count towards qualification for the single currency. But we should be considering urgently not only whether we will qualify, but also how best to survive and hopefully prosper within the monetary union.