Ireland ‘must learn lessons about dangers of reliance on property’

Ireland must focus its efforts on diversifying its economy and competing internationally in order to sustain growth, the Irish ambassador to the UK has said.

Daniel Mulhall told The Yorkshire Post that the biggest lesson the country has taken from the 2008 financial crisis was the danger of relying on a single sector to produce prosperity.

Ireland’s property sector collapsed following the credit crunch, plunging the country into a deep recession.

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Its economy has since recovered, growing 5.2 per cent in 2014. It is forecast to grow by around six per cent this year.

Speaking at the opening of Allied Irish Bank’s (AIB) new Leeds branch, Mr Mulhall said: “We became excessively dependent on the property sector. When the sub-prime crisis hit us from the US, it meant the financial system seized up.”

While in 2006, the country was building 90,000 houses a year, this dwindled to less than 5,000 in the depth of the recession, which was a “serious shock to the system”, Mr Muhall said.

He added: “I hope and believe that people have learned the lesson.

“The only future for Ireland is to be a competitive economy that’s able to produce goods and services which are marketable around the world. We need to export, and we need to be competitive.”

While it is impossible to rule out the property bubble inflating again in future, Mr Mulhall said Ireland’s central bank is “much more watchful” about what is done now.

A key part of recovering from the recession has been rehabilitating the banking sector, he said.

“The banks were part of the crisis we had , but they’re also part of the solution,” Mr Mulhall said. He added it was “great to see one of Ireland’s pillar banks” expanding in the UK.

AIB’s UK arm launched its first Yorkshire business centre in Leeds, as it looks to expand its presence in the UK.

It follows the opening of its Nottingham branch and investment in its Manchester and Liverpool sites.

Former Natwest director of commercial and business banking Tony Kelly has joined AIB (GB) as regional director for the North of England, to help refocus the bank towards the small and medium-sized enterprise (SME) market.

Mr Kelly said the bank has spent 12 months consulting with customers and repositioning its teams to better serve owner-managed business.

He said: “Customers want their bank to understand them, their business, their future plans, their sector.

“That all involves your staff having the time to spend time with the customers, get under the skin of the business and how it operates.”

He admitted “mistakes have been made” in the banking sector that have given banks a poor reputation among business owners.

“When people are offering criticism, constructive or otherwise, you’ve got to listen to what’s being said,” he said.

“The way AIB (GB) has chosen to listen is to reorganise itself around the key engine for growth and economic sustainability, which is the SME marketplace.”