Caution should be the watchword for us as UK and Liz Truss are on the brink

The worlds of business and politics often mesh poorly and sometimes not at all. Businessmen and politicians approach the world from decidedly different perspectives, with the businessmen being driven by pragmatism and profit while the politicians must incorporate a good dose of gut atavism and popular identity.

But last month’s turmoil in the UK gives us a very good illustration of how the operators of the international money markets deal the real power blows. It is imperative for us in Ireland to keep in mind what happens when ill-conceived policies collide with stark economic reality.

Today, too, all British politicians – and the general public – will be watching the world money markets nervously from the start and hoping for a return to stability. But the bell is ringing for Britain’s Prime Minister Liz Truss, and disgruntled Conservative MPs are considering the method of picking her fourth leader in just over six years.

Ireland’s politicians – brutally educated by the November 2010 bailout – appear to have internalized many of the lessons about the value of wise spending.

A generous but necessary package of living support for the most vulnerable is now being provided by our government without recourse to credit.

One shudders to think what might have happened if the windfall of the sharp increase in corporate tax revenue had not happened by accident. But that’s not the only factor that has left Ireland’s national record in better shape than ever.

The government is running a surplus and the balance of payments is in the black. The last time global storm clouds were in sight over a decade ago, that was a different story, and this country was the most vulnerable to a global economic crash. In the next two years in particular there will be further problems and challenges. But for now, suffice it to think that things are about as good as they might be in the face of another unpredictable global economic storm, with real hope that the Irish economy can weather the inevitable shocks. This is as good as it gets and nobody has long-term guarantees on anything.

Britain’s current political and economic horror show is also an opportunity for Ireland’s political leaders, and the population at large, to validate some recent lessons and take new ones into account. The turmoil in Britain, which has pushed up mortgage rates and sent pension funds tumbling, shows what can happen as a result of bad leadership.

There is no room for Irish complacency here, for this cautionary tale tells us that our most important trading partner, which commands a great deal of say over much of this island’s territory, can influence us very directly.

The UK is still a G7 economy and we all live in a potentially contagious financial world where economic viruses can spread to relatively healthy economies.

The turmoil in London could now be affecting the eurozone with immediate consequences for younger Irish people.

Caution must be our motto. Caution should be the watchword for us as UK and Liz Truss are on the brink

Fry Electronics Team

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