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WHEN THE GAME CHANGES
A PATH TO RECOVERY AND RENEWALFOR THE IRISH ECONOMY
Ronald GreenspanSenior Managing DirectorFTI ConsultingMarch 26, 2009
THE iSSuES bEHiNd THE HEAdliNES
Introduction.3The.intrinsic.strengths.of.the.Irish.economy.4Current.situation.5.The.tipping.point.6Government.response.to.date.7Framework.for.immediate.action.8.Resolve.the.banking.crisis.8.Rebuild.condence.and.goodwill..11.Address.public.nance.and.regulatory.concerns.12Conclusion.15.
TABLE OF CONTENTS
WHEN THE GAME CHANGES
—A PATH TO RECOVERY AND RENEWAL FOR THE IRISH ECONOMY
3
The world is in the midst of a crippling recession and nancial crisis which has broughtwith it a systemic de-leveraging, restructuring and outright re-invention of the globalmarketplace. Despite the recent rise of protectionist rhetoric, if ever there were doubtsabout the interdependence of the global economy, those doubts have been put to restfor good. While the degrees and timing vary, every developed country is experiencingeconomic pain and struggling with nding hindsight explanations, short term cures andlong term solutions.Ireland is no exception, and in fact it encountered severe economic challenges – andenacted dramatic solutions – earlier than most other economies, including its peers in theEuropean Union. It was the rst euro zone economy to enter recession, the rst to inject itsown capital into its banking system, and the rst to introduce dramatic restrictions to itspublic spending programs. As such, its economic challenges and responses thereto are moreadvanced than many other Western nations.Now, in some ways, Ireland nds itself economically trapped. The industry sectors whichhad helped fuel its record growth – real estate, nancial services and export manufacturing– are the primary sources of its economic problems today. Further increases in governmentspending to stimulate the economy are impractical or unavailable due to deteriorationin public nances, rising borrowing costs, and a perceived risk of default. However,the government has taken strong action to date, and we believe additional action, if coordinated and communicated thoughtfully, can sow the seeds of genuine recovery.The current scale and globalization of problems are unique, but the pathways towardrecovery have been put to the test repeatedly and always involve xing the banking systemand restoring condence within all constituencies. This paper provides a framework forimmediate action, based on FTI’s decades of experience advising governments and nancialinstitutions facing comparable situations. Our recommendations center around three keythemes:Resolve the banking crisisRebuild condence and goodwill for long term recoveryAddress public nance and regulatory concerns
INTRODUCTION
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