Meanwhile, Ireland Is Quietly Deteriorating


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While you may have been distracted by the continued failure of austerity in the UK, the situation in Ireland speedily deteriorated through the month of April too.Stat after stat collapsed in March. Consumer confidence improved slightly, but the inflation situation got much worse.

From Bank of America Merrill Lynch:

March’s data reflects a subdued macro picture. Retail sales fell 3% yoy in Q1 2011 although March consumer confidence rose to a 7-month high of 59.5. The services PMI fell to 51.1 versus 55.1 in February, and manufacturing PMI softened a point to a 55.7 from 56.7 for the same period. CPI rose 3.0% yoy in March compared with 2.2% in February. The budget deficit widened to €7.1bn in March 2011 compared with €3.9bn in March 2010. This was largely because of a €3.1bn capital expenditure payment to Anglo Irish and Irish Nationwide.

As the Irish economy continues to fray, anger is likely to grow against European institutions that organised the country’s bailout, absent any haircuts for bank bondholders. There is already speculation Ireland will have to pay a higher interest rate on its bailout than either Greece or Portugal, with the Jean-Claude Trichet having to defend the ECB and say it’s “siding with Ireland.”