Ireland is feeling the knock-on effects of the American housing slump, according to the chair of London School of Economics, BP and Goldman Sachs, Peter Sutherland.
In advance of his keynote address to the Irish Management Institute in Enniskerry today he said trouble in the US economy had affected all Western economies.
In Ireland, he said, we have already had a fall in house prices and building. He says this sector represents 13% of Irish GDP, compared with 4% in the UK.
But he said a building slowdown did not represent the same systemic risk to the Irish economy that would have been the case in the US.
'It is serious but we shouldn't consider it to be apocalyptic,' Mr Sutherland said. He said Ireland was protected, because it had a much better savings ratio - 11% - than in the US, where it is zero.
'We have experienced and will experience more negative effects from house prices dropping and less building. It is going to have a negative effect on our economy, it would be amazing if it didn't. But I think we should be careful not to talk us into too negative a view about the Irish economy.'
Mr Sutherland said the Irish economy had performed remarkably well over a period of years and had greater strengths than were recognised, including indigenous industry.
He said some of the recent hits the Irish Stock Exchange had taken had been undeserved, adding that he was worried by some comments made domestically and subsequently reported in the British press and elsewhere about the state of the Irish economy.
'I think we have to fight our way through this, everybody does, but I don't think we're in such a negative position as is reflected in some of the share price drops,' he said.
Mr Sutherland criticised third level education, saying it was falling behind because of a lack of funding. Ireland has only two universities in the top 200 world rankings. He suggested fees be introduced for students who could pay, or that government subventions be introduced.
'Education has to be a key element of our future, as does second-level education, where we clearly have issues in regard to mathematics, and science.' Mr Sutherland also said a yes vote in the upcoming referendum was absolutely vital for the economy.
