By Jacob Richards
Over the last few days the government has been quick to highlight the impending conclusion of Ireland’s bailout package as a clear sign of economic recovery. The media have eagerly jumped on the bandwagon with claims that the final bailout review visit by the troika is a “historic day.” Such headlines fit the general narrative of neo-liberalism whereby once, we as a sovereign nation can return to the financial markets, everything will be just fine and dandy again. The reality is that this is just opportunistic spin and drivel by our government and media who are quite content to sing the same tune.
While the government proclaims economic recovery, the Central Bank has just published an interesting report that paints a very different picture. Published today the “Report on the Licensed Money Lending Industries” contains some worrying findings. The number of people being forced to use services such as payday lenders has increased by 60,000 in the last number of years, and now stands at approximately 360,000. The most frequent payment terms offered by these money lenders are approximately 9 months at an interest rate of 125% and in some cases far higher. The report also states that the most common loan amount is between €200 and €500.
These findings clearly illustrate the dire financial circumstances that thousands of ordinary citizens find themselves in. €200 is a lot of money to a family struggling to cover the cost of bills and putting food on the table. The fact that moneylending services are profiteering with such punitive rates in these dire circumstances is not new but is frightening none the less. The obvious problem is that these loans can spiral out of control quickly, an initial loan of €200 can become two or three times that in a matter of months, plunging the borrower into financial despair. In fact the Central Banks’ report says that a quarter of those surveyed had problems meeting their repayments in the last 18 months.
The issue of payday lenders has caused considerable controversy in other jurisdictions such as England where Labour MP Stella Creasy has championed the issue of tighter regulation and caps on the maximum amount of interest rates allowed. The issues are similar in Ireland where companies such as Dublin based Southside Finance charge as much as 188% APR on a 20 week loan and then impose weekly collection charges on top of this. In terms of Irish legislation the moneylender is merely required to advertise loans as high cost if the rate of APR is over 23% and the Government has shown no intention of restricting or regulation this type of loan.
It is a poor reflection on the current administration that 360,000 people in Ireland are trapped in these extortionate loans. This government has failed to grasp the hardship imposed on people by their policy of austerity. They are proclaiming triumph in the battle for economic recovery while hundreds of thousands of Irish people can barely stay afloat.
Just ask the 420,000 people on the live register, the 360,000 people forced to take out loans from moneylenders, the 100,000 people in mortgage arrears, the 64,000 under 25s on the dole, or the 80,000 people forced to emigrate every year, if they think their economic recovery is on the cards? Their answers are likely to very different to the tune this coalition government is currently singing.