SF probably in government in 2025, economist predicts

NAMA caused the housing crisis, Brexit was the greatest economic fiasco imaginable, and Sinn Féin will probably be in government in 2025 – these were some of the proclamations made by economist Jim Power in Mullingar last week.

Mr Power was one of a panel of speakers who addressed a seminar organised by Blackhall Financial Services in the Mullingar Park Hotel, ‘2023 Economic and Investment Outlook’. More than 40 businesspeople and investors attended.

The MC for the event was Gerry Cooke, director of Blackhall Financial Services. Panellists were Mr Power, Darragh Murphy of Quilter Cheviot, James McEvoy, Greenman Investments, and Anne-Marie Hannon, managing director and special investment advisor, Blackhall Financial Services.

Mr Power, who introduced himself as being from the same parish in Waterford as retired Mullingar teacher, Tom Hunt, said the election of Donald Trump, Brexit and Covid all caused huge disruption, and they were followed by the Ukraine war.

He said that as Covid restrictions were lifted, repressed demand met supply shortages – people had money to spend, but businesses had cut back or shut down production.

As things were settling down, Russia invaded Ukraine. Oil, natural gas, construction material and food prices soared.

Energy prices have started to fall, Mr Power said, adding that in September last year, European natural gas prices were at €350 per megawatt hour; they were trading around €24/€25 last week and he expects consumers will feel the benefit in the coming months.

Mr Power finds global politics “scary”. Brexit was the greatest economic fiasco you could possibly imagine – it made no economic sense whatsoever. You look at Trump’s anti-globalisation, anti-free trade policies; China is becoming more totalitarian and, as a place to invest, it is becoming more dangerous. The Ukraine war is ongoing and then there is climate change, he observed.

Ireland’s economy has taken off since 2014/15, according to gross domestic product figures, but Mr Power warned that those figures are distorted by the fact that multi-nationals repatriate profits back to their home countries. Last year, Irish GDP was about €470bn, but €130bn of it went out of the country, mainly to the US, he said.

In 2015, a small number of international companies moved their intellectual assets to Ireland for tax purposes, Apple being one of the biggest. They have virtually no impact on the economy, but are part of our GDP. This grossly exaggerated GDP means we pay more to the European Union, Mr Power warned.

He reported that income tax take was up €4bn last year, but 83% of it is paid by 25% of workers. We collected €22.6bn in corporation tax; 10 years ago we would have been lucky to collect €4bn, but 10 companies account for 57% of it. If any of them got into trouble, we could see a significant decline in taxation, he warned.

Mr Power took “serious exception" to comments made recently by President Michael D Higgins “about economists being obsessed with economic growth”. Without a functioning economy, you will not generate tax revenues that fund public expenditure, including Michael D’s 12 pensions, he said.

“I haven’t taken the utterances of that man seriously in three decades,” he remarked. NAMA treated all developers like “tax criminals” and forced them out of business. Without developers, you don’t get development. Between 2011 and 2021, we delivered just over 13,000 houses per annum when we should have been delivering more than 40,000. They are wondering why we have a housing crisis! It’s not rocket science! he remarked.

The population has passed five million for the first time since the Famine and people are living longer. In 2011 we had about 150,000 over the age of 85, in April 2022 that was up at about 550,000, which has huge implications for health services, nursing home provision and pensions, he said.

Mr Power feels there is a high probability that Sinn Féin will be in government in 2025. As individuals and businesses, you have to think about what economic policies they will pursue and what you need to do to deal with them, he advised the audience.

In reply to questions from the audience, panellists warned that houses need to be built and the whole planning system overhauled to make it “fit for purpose”, NIMBY-ism must be stamped out and a proper finance model devised for developers; energy bills might rise again this winter; the green energy business is the future and is ripe for investment; we will see more economic, political and climate change migration; equities are good investments.

Mr Cooke thanked all who attended and invited them to talk to Blackhall Financial Services, without obligation, “to see what we might be able to offer you”.