Barroso

James Mackintosh

Ireland’s recent history is a story of hopes dashed. Hope is now being stoked again, not least by those with the most interest in being positive: the Irish government and European lenders.

For Europe, Ireland is the poster child for austerity and must, just must, be recovering. Some positive jobs figures, showing the first growth in employment since 2008 (on which more later) have prompted what passes for elation in the depression-hit island.

European Commission President Jose Manuel Barroso led the cheering this week on a visit to Dublin, saying Ireland’s economy “is turning the corner”.

It shows that the programmes can work. It shows that there can be light at the end of the tunnel.

When there’s a determination we can achieve results. This is a message that’s valid for Ireland and other countries that are going through reforms.

Of course, he wants to believe this. Europe desperately needs a success story to set against the anti-austerity vote in Italy, yet more gloom in Greece and a worsening economic outlook for the eurozone.

But the bond markets agree, and have done for months. Irish 8-year yields (its benchmark) stand at 3.7 per cent, lower than Spain and Italy. The country has successfully returned to bond markets, and hopes to bring in a 10-year benchmark before the end of June. Even the inconclusive Italian elections prompted only a slight wobble.

So, have the markets become too optimistic? Below is a rather longer than usual read on Ireland and the wider eurozone issues. Read more