Leading US economist advises Taoiseach to repeat demands for debt relief

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Leading US economist advises Taoiseach to repeat demands for debt relief NewsLineToday    Gallery Enlarge Image

Manju Shukla
Date  23/01/2014
US economist Ken Rogoff has advised Taoiseach Enda Kenny to reiterate his demand for Irish debt relief at the World Economic Forum today in Davos.

Mr Kenny, accompanied by Minister for Finance Michael Noonan, will meet business and political leaders and attend an IDA investor dinner this evening.

Ahead of the Taoiseach’s appearance this evening on a panel discussing European competitiveness, Prof Rogoff said it was “not in Europe’s interest for Ireland to grow slowly”.

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“Of course Mr Kenny has to accentuate the positive and talk people into investing in Ireland but he also has to say, ‘We have tough decisions ahead’,” Prof Rogoff said

“If there is talk of debt writedowns for Portugal, Ireland has to say, ‘We tried hard, we adjusted, what about us?’

“A debt write-down for Ireland would be the right thing for Europe to do.”

After dominating Davos for three years, the euro crisis is moving down the agenda. An early panel yesterday framed the discussion in a hopeful tone, asking “Is Europe Back?”

Renewed instability
That didn’t prevent ex-Bundesbank president Axel Weber warning that, although Europe had stabilised, it faced low growth and renewed instability this year.

One source of concern was the potential rise of more extremist parties in May’s European election, he said. Another potential source of instability, he said, could come with investors trying to bet on the winners and losers of looming European bank stress tests.

“An exam where everyone passes is usually viewed as not being a credible exam,” said Prof Weber, who is chairman of Swiss bank UBS, which is not part of the stress tests. “And I expect some of the banks not to pass this test. Despite the pressure from politics, some will not pass.”

Fellow panellist Martin Sorrell of WPP, the world’s largest advertising firm, said he was “very bullish” about growth prospects for “the bookends of Europe”: the UK, Germany and Poland. France, Spain and Italy, meanwhile, remained at various downward stages of economic downturn.

A Davos survey from consulting group PwC indicated that about twice as many chief executives are confident about the coming 12 months than last year, with the world’s most confident managers based in western Europe.

Some 44 per cent of executives said they saw an improvement in the global economy. Just 7 per cent see a global decline on the cards this year, down from almost a third.

Technological concerns are looming large this year at Davos, led by ongoing revelations about surveillance by US intelligence on global communications.

Yahoo chief executive Marissa Mayer told delegates she expected the White House to provide greater transparency on the data collected by the NSA.

“We need to be able to rebuild trust with our users, not only in the US. but internationally,” she said. “People don’t know what data is being collected and how it is being used.”

Cisco Systems chief executive John Chambers called for global rules of the road on privacy, calling existing regime a “wild west”.

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