Working with UK 'vital to Republic's recovery'
Published 26/09/2012 | 08:00
The Republic must align itself with the UK to secure its economic future, a report by a London asset manager has claimed.
Toscafund's discussion paper, 'Seeing a Quite Different Island in 2020', said Ireland could not rely on other countries in the eurozone.
"If its economic re-engagement with the UK is not at the centre of Ireland's future recovery, we cannot think what else credibly will be."
The authors said the growth which took place in the Republic in the 2000s could not have been sustained, describing a construction boom fuelled by migration and funded by a banking system "that seemed to know no constraints in its lending".
"Crucially, Ireland's accession to the euro deprived it of an independent monetary policy. Economic gravity was always going to hit Ireland, and 2008 was when the apple dropped."
Recovery would require looking to the UK. "As continental Europe descends into recession, Ireland's leaders need to accept the interests of their economy are better served by engaging with a recovering UK."
But Andrew Webb, economist and director at FDI specialists OCO Global, said it would be wrong for the Republic to position itself too closely to the UK for its economic regeneration.
"There are still great opportunities to be had for the Republic from the States. Even recently we have seen service-based US companies such as PayPal, Twitter and Google establish and expand their operations there.
"And from an exports point of view, there are significant markets to develop beyond the UK. Ireland's exports to China, for example, have grown by 10% in each of the last two years."
But economist John Simpson said: "I think there's more and more evidence that the economic management of the Irish economy needs to be consistent and complementary to the British economy."