The unemployment rate has dropped for the fifth consecutive month, to 13.2 per cent in October - the lowest level since early 2010. The trend, which indicates a slow but steady decline in the jobless rate, is encouraging. When allied to a sharp rise in consumer confidence, according to the latest KBC Bank Ireland/ESRI national survey, both these indicators offer grounds for optimism about economic recovery. Consumers, it seems, are more willing to start spending again, their spirits buoyed by a brighter economic outlook. Nevertheless, with the numbers on the live register at just under 400,000, the scale of the unemployment challenge remains immense.

If the domestic economic environment has shown some signs of improvement, the picture elsewhere - not least in the euro area - is less encouraging. The euro has been pushed higher against the dollar, which has made it harder for euro area exporters to compete on price in global markets. Inflation in the euro zone has fallen sharply - to 0.7 per cent - far below the 2 per cent target rate set by the European Central Bank (ECB). At the same time, unemployment in the seventeen euro countries soared to 12.2 per cent in September, a record high. Clearly, Europe isn't working as it should.

Certainly, the ECB has been slow to recognise the problem, and to cut interest rates. This is needed both to check the euro's rise in value and to help the peripheral economies that are struggling with high debt, high unemployment and low growth. The real problem is deflation, not inflation, something the ECB has failed to accept. As one former ECB governor recently noted: "What scares me is that the ECB seems to be formulating policy for Germany without any regard for everybody else." Germany's unemployment rate is 5.2 per cent, while that of Spain and Greece is five times higher. The ECB's mandate requires it not only to concern itself with price stability, but also to support the "general economic interests of the Union". Time for it to act, and to honour that obligation.