Aug. 30 (Bloomberg) -- Ireland’s aggressive efforts to cut spending will make it the first European nation to recover from the sovereign-debt crisis, according to the billionaire investor Wilbur Ross.
“Ireland will be the first of the euro countries to recover because they really bit the bullet,” Ross, chairman of WL Ross & Co., said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “Once they get through all that, the fundamental advantages of Ireland are intact.”
Ross, whose firm manages about $10 billion in assets, joined four other investors in agreeing to buy a 34.9 percent stake in Bank of Ireland Plc. The firm is alone among the country’s six largest lenders in avoiding government control. The bank was ordered to raise 5.2 billion euros ($7.4 billion) of capital following stress tests in March.
Ireland’s advantages include the lowest corporate tax rate in Europe, a young and well-educated workforce and a solid transportation and communications infrastructure, Ross said.
“Ireland will once again become the Celtic Tiger,” said Ross, 73. “We’re very heavily invested there.”
For an investor in distressed assets, Europe is more attractive than the U.S. “because that’s where the problems are more severe,” Ross said.
European confidence in the economic outlook in August plunged the most since December 2008 as a persistent debt crisis roiled markets and clouded growth prospects across the 17-nation euro region.
An index of executive and consumer sentiment in the single-currency region fell to 98.3 this month from a revised 103 in July, the European Commission said today. That’s the lowest since May 2010.
The euro area’s economic prospects are deteriorating as national governments cut spending in a bid to narrow deficits and tackle the debt crisis.
Economic and Monetary Affairs Commissioner Olli Rehn signaled yesterday that the EU may reduce its 2011 growth forecast from 1.6 percent on concern financial turbulence may spill into the broader economy.
“We’re actually a good deal more worried about Europe’s economy than the U.S. because it’s unclear how the relationship between the European Union, Greece and the other Club Med countries will eventually work out,” Ross said. “There’s a lot of turmoil there, and any one of those pieces could produce a severe problem.”
--Editors: Dennis Fitzgerald, Greg Storey
To contact the reporters on this story: Daniel Kruger in New York at firstname.lastname@example.org; Tom Keene in New York at email@example.com
To contact the editor responsible for this story: Dave Liedtka at firstname.lastname@example.org