Confidence is an intangible, but powerful, agent in the economy. When you have confidence, deciding to take risks, invest, and expand is easier. Without it, the option to hold back, wait, and procrastinate is more palatable.
In an environment full of confidence, an economy expands and flourishes; the absence of confidence is a drag on momentum. In a strange way, the UK election campaign, over recent weeks, has restored Irish people’s confidence.
The absence of daily, doom-laden headlines about Brexit, coupled with continued, incremental positive news about foreign direct investment projects has helped build momentum towards year-end.
A clear outcome in the British general election, probably defined by a majority for the Conservative Party, is capable of giving a further nudge to the upbeat mood, as financial markets cheer clear-cut political decisions.
A short 10 years ago, things could not have been more different. In the aftermath of the global financial crisis of 2008 and the collapse of the Lehman Brothers bank, the Irish economy was a sorry sight. Job losses and salary cuts were widespread, emigration was in full flow, and confidence across society was shattered.
Moreover, worse was to unfold, in 2010 and 2011, as the consequences of a sharp recession and a contraction in exchequer receipts led to cutbacks in government services. At that time, the notion of full employment, the strongest GDP growth rates in Europe, and complaints about infrastructural bottlenecks were the stuff of fantasy.
Yet, here we are, hurtling towards the end of 2019 with these issues dominating political discourse. Entering 2020, there are multiple reasons to worry. Brexit will rear its head again, once the new UK government is in place.
Global trade remains haunted by the risk of failed US-China negotiations. Debt levels around the world have ballooned, amid record low-interest rates. Some financial assets are displaying bubble-like attributes. At home, there are clear fractures in Irish society.
Homelessness is a blight on our collective consciousness, while climate change is a real force of change overhanging everyone. Each of us has to weigh these factors up and use them as inputs for decision-making. If you deem these issues overwhelming, then it is time to retrench, batten down the hatches, and preserve what’s your own.
If, instead, you have confidence about the future, then it is more likely you will invest, spend, and grow. The latter route requires a ‘glass half full’ mentality, which, for good or bad, I inherited from my predecessors. In this, perhaps deluded, world a different vision exists.
The facts show people are healthier, and living longer than ever, across the world. Employment levels are near record highs, generating incomes and a real job to support yourself and your family.
Rapid advances in technology are helping solve major health, food, and communications challenges that were science fiction a couple of decades ago. Engineering is showing signs of applying to climate change the same zeal and ingenuity that transformed infrastructure in the Victorian era.
The critical differentiator between the pessimism and optimism that define both sides of this debate is confidence. Instilling such a mindset is key to unlocking the positive energy needed to move forward. Dwelling in a morass of negativity has the opposite effect.
Influencers, of which the media is a key component, have an important role to play in this tussle. Constructive and positive commentary or analysis can play an important role, if accompanied by solid research and facts. Fatuous negativity, of which there is much when the sluice gate of social media opens each day, is less helpful.
Here’s hoping for a more informed and positive debate next year.