Ireland is a "role model" for other countries under the bailout programme, outgoing ECB member Jurgen Stark said today.
In a lunchtime address to the Institute of International and European Affairs in Dublin, Dr Stark commended Ireland’s adherence to austerity measures.
"It is feasible, it’s possible to implement progress as long as there is support from the society and consensus across political parties,” he said.
The country's household debt stood at 120.8 per cent between the years 1999 and 2010, compared to a European average of 65.8 per cent, he said.
Stressing the “heterogeneity across member states” , Dr Stark said that a “deficit in one country is due to a surplus in the current account of another country”.
He pointed out that, while inflation on average in the euro zone between the years of 1999 and 2010 was 26.5 per cent, in Greece this figure was 46.9 per cent, 34.6 per cent in Ireland, 33.8 per cent in Portugal, while France saw its inflation rise by 23.1 per cent and Germany, 19.8 per cent .
Similarly, in contrast to a euro zone average of 1.6 per cent, Greece saw its unit labour cost rise by 3.5 per cent over this 11 year period, Spain by 2.5 per cent and Ireland 2.6 per cent.
On the global economic outlook, Dr Stark said that the global economy faces “strong headwinds” which will continue to restrain the economic recovery, particularly in advanced economies.
However, he described the fourth-quarter slowdown in the euro zone as a “temporary soft patch”, warning against “talking ourselves into a recession.”
He also noted that “debt tolerance is declining” among investors, with investors “taking a closer look at fundamentals of countries before investing.”
