It has been another year of exceptional economic performance. The economy has grown by seven cent plus, total employment has risen by more than 100,000, and most people with jobs are better off than they were a year ago. In just a few years the economy has been transformed from one of Europe's laggards to its leading performer, with living standards here now fast approaching the EU average.
Will it continue? Indeed, can it continue? Many are forecasting that the "boom" - now under way for five years - is bound to end in "bust". In the City of London - the most powerful financial centre in Europe - many feel that it is only a matter of time before the Republic's economy runs into trouble. They draw parallels with Britain in the late 1980s and predict that the same painful readjustment will be experienced here.
A closer look at the Republic's economy provides grounds for confidence. The growth of the last few years has been based on sustained improvements in productivity and, thus, in competitiveness. The economy should grow strongly again next year, even if the pace of expansion does begin to ease. If we are lucky, then economic growth will gradually slow back to a more sustainable pace.
There are, of course, risks. The economy is small and open to external influences. If the US economy were to run into difficulty, for example, perhaps precipitated by a collapse in its equity market, this could affect the multinational firms which employ many thousands of people here. However, for the moment, the international outlook remains benign and a pick-up in economic growth in the major Continental EU economies, and in the UK, should support exporters next year.
There are warning signals that inflationary pressures are now seriously affecting the economy and that the rate of growth will have to ease back. House prices continue to rise; there was some sign of a moderation in the rate of increase towards the end of this year, but the Budget tax package may give a further boost next year. Consumer price inflation and wage inflation have both picked up sharply. If these factors are fully reflected in the wage element of a new national agreement, then a higher inflation rate may become embedded in the economy. Unless this is offset by further productivity gains, then the inevitable result will be a gradual erosion of competitiveness.
Growth is bringing other problems. Road congestion is now a serious issue - in Dublin and its environs in particular. Many businesses are finding it impossible to attract employees to fill vacant positions. There are signs that many parts of the economy's infrastructure - the telecommunications and energy networks, the ports, the major airports - are struggling to keep pace with the expanded level of economic activity. And many have not benefitted from the economic upturn. Pockets of severe deprivation remain in our cities - while many in rural areas also struggle in poverty. The economic boom has not benefitted all areas of the Republic equally, with the vast bulk of the new investment and jobs in the Dublin region. Many groups - some with more justification than others - argue that they are not getting their share of the fruits of growth.
The unease among some sections of the population about how they have fared has been fuelled by a number of factors. One is the extraordinary amount of money being made by leading figures in business, typically from either selling their company, or floating it on the stockmarket. The emergence of so many enterprising young companies is one of the most encouraging developments of recent years; the exceptional rewards reaped by senior executives do, in some cases, appear excessive.
Another factor feeding demands from some sections for a bigger share of the cake has been the succession of scandals brought to light through tribunals and through the DIRT Inquiry, which have raised serious questions about the conduct of business and its relationship with politics. In essence, they have added weight to the view that there is one law for the rich and one for the rest of the community. The Government - and the Revenue Commissioners - must be unrelenting in pursuing the matters raised, in order to see justice done and to start to restore faith in the "system. " This will be no easy task; such are the complexity and detail of the issues raised, that the fall-out from the scandals of 1999 could go on from some years.
Other policy challenges also face the Government. The turnaround in economic fortunes requires a complete change in the mindset of our policymakers. Having grappled for years with economic failure, they are now confronted by the more complex problems of success. In the past there was one over-riding priority of economic policy - job creation. For many years, even pursuing this goal had to take second place to attempts to pull the State back to financial solvency. Now, with the economy approaching full employment and the exchequer coffers flush with cash, the picture has changed. The ability of policymakers here to affect the overall level of economic activity is limited. Interest rates are now set in the European Central Bank in Frankfurt. The annual Budget has some impact on the economy; the 2000 Budget was overly generous in its tax concessions, particularly for the better off. But the main challenge for policy is to help build the overall efficiency and performance of the economy.
One priority for 2000 must be to negotiate a new national agreement. To conclude a deal, all sides will have to show an imaginative approach to sharing the gains of growth and a determination to tackle social exclusion. The Government has also set out its priorities for investment in the years ahead in the new national development plan. Unfortunately the new national spatial strategy - which will plan how to spread economic activity throughout the State - will not be completed for another two years. That apart, the plan contains many worthwhile investment programmes; the difficulty now will be in turning these plans into reality. In this and other policy areas the Government has no shortages of resources. What it requires is imagination and a thought-through policy approach. The challenge is to build on the success of recent years and erect the foundations for sustained economic growth, which benefits all sections of the community.