• Home   /  
  • Archive by category "1"

Essays On Irelands Economy

Irish Economic Crisis

Ireland is a tragic case for a few reasons.

Boom and Bust. After joining the EU, Ireland appeared to have an economic miracle - rising investment, growth and rising living standards. At the start, much of this was based on a solid foundation. Investment helped lift Irish living standards. But, unfortunately, the positive growth led to an unsustainable boom. Banks got carried away at the prospect of continued growth. Banks relaxed their lending criteria and reduced their liquidity ratios. This led to a boom in construction and housing. When the economy turned, many investment projects looked too ambitious. Firms lost money and this led to record bank losses. The boom had turned to a bust, and the government was forced to bailout the Irish banks.

The combination of bank bailouts and economic downturn led to a dramatic collapse in tax revenues and need for more welfare payments. The Irish budget deficit shot up from 3% of GDP to over 12% of GDP (35% if you include bank bailouts)

Faced with a recession and large budget deficit. The Irish government felt they had no choice but to tackle the deficit through higher taxes and spending cuts. Remarkably the Irish electorate largely accepted these stern measures such as public sector wage cuts of 5%. Yet, these emergency measures exacerbated the loss in confidence and led to lower spending and investment. The consequence of the austerity measures was that the Irish economy suffered a double dip downturn.

Ironically, the harsh austerity measures failed to reassure nervous European bond investors. Bond yields on Irish bonds have continued to grow to crippling levels. The result is that Ireland is facing the need for a bailout and more austerity measures. This is the last thing the economy wants, but, given constraints of being a Euro member there is little alternative.

Lack of Alternatives

The Irish largely see EU membership as an unqualified success and by implication, membership of the Euro a good thing. Unfortunately, this crisis has shown the limitations of being a member of a single currency and common monetary policy.

Usually, a country in the situation of Ireland which needed to cut budget deficit in times of recession, would at least have monetary policy to offset some of the decline in spending and investment. For example, they could have followed UK and pursued quantitative easing. This would have increased demand and lowered their exchange rate. This depreciation would have helped domestic firms exporting.

But, Ireland doesn't have this option. Membership of the Euro means you have to follow the unpalatable options but, there isn't much else you can do to help.

The situation looks grim. There may be some crumbs of comfort. Recent figures on investment spending looked promising. The Irish crisis is ironically going to weaken the Euro. But, it may not be enough to pull the Irish economy back to growth without much economic pain.

There is also a sense of unfairness. The banks which created a large part of problem through irresponsible lending have been rescued unconditionally by government. But, it is ordinary people who are experiencing pain of wage freezes, job losses and spending cuts.

If it was as simple as leaving the Euro, I would tell them to do it tomorrow. But, leaving the Euro is not that simple. (why difficult to leave Euro)

The Irish economy shows

  • The dangers of allowing a boom and bust in bank lending
  • the difficult of cutting budget deficit in recession. - Measures tend to be self-defeating unless you have some very powerful antidote.
  • The difficulty of adopting a common monetary policy for an area as diverse as the Eurozone.
The Irish is crisis is particularly tragic because it didn't need to be like this. With better regulation and monitoring of the boom, lending could have been curtailed in boom. If they weren't in the Euro, they would have had more room for manoeuvre to deal with the situation they currently face.


Ireland Economic Crisis Essay

The Euro zone crisis has impacted many countries such as Ireland, Portugal, Italy, Spain and Greece. Many say the Euro zone crisis was triggered as a result of the initial Global Financial Crisis that started in the United States in 2008. However, these countries, and Ireland in particular, would not have been sent into a recession if their own economies and debt were in order. Ireland was the first state in the eurozone to declare tit’s entrance into a recession.. However, on November 29, 2010 the European Union, the International Monetary Fund and the Irish state agreed to a €85 billion rescue deal for Ireland, but there were certain policies Ireland had to implement in order to receive it. The question left to be answered is whether these policies and conditions have actually helped Ireland dispose of their financial hardships or at least recover to the point of economic and political stability. As of 2013, Ireland is on track to leave the bailout program in December.
The period of high economic growth rate in Ireland was between 1995 and 2002. It was named the period of the Celtic Tiger and it contained increasing productivity in Ireland, a very strong fiscal position of the Irish state was a low unemployment rate fell of around 4% “("Ireland's Economic Crisis: How Did It Happen and What Is Being Done about It?"). However, not long after, from 2002 onwards, the boom Ireland was experiencing had begun to shift. Initially triggered by the global financial crisis of 2008, Ireland was in trouble. For example, “labor productivity was no longer increasing, inflation was high and growth in GDP became related to the housing market” ("Ireland's Economic Crisis: How Did It Happen and What Is Being Done about It?"). While at this point the state appeared strong, this was not the case because most of the revenue the state took it was related to the property market. Property related revenues included capital gains tax, a large amount of VAT paid by developers and income tax paid by workers in a very large construction sector. The tax base was very dependent on the housing boom.
However, even with trouble on the horizon due to the housing market, Ireland did not take any action and continued funding expensive capital projects, increasing public expenditure and they rose spending in many other areas. This, along with the fact that the balance sheets of the Irish grew large relative to the size of the economy, was damaging when the housing bubble finally bust.
Thus, when the housing market finally reached its peak in 2007, the tax revenues began to decline dramatically because they were strongly based on the capital gains tax, the VAT paid by developers and the income tax of construction workers. Thus, with the fall of the real estate ,market, new home completions fell, and by 2008, Ireland experienced its first significant increase in unemployment in 15 years ("Ireland's Economic Crisis: How Did It Happen and What Is Being Done about It?"). In...

Loading: Checking Spelling


Read more

Franchising in Ireland: Should Five Guys Go Irish?

2127 words - 9 pages FRANCHISING IN IRELAND - SHOULD FIVE GUYS GO IRISH? Making a decision on products and countries seemed daunting at first. Brainstorming with associates and friends to find that perfect idea that held my interest seemed impossible. Several ideas were discussed and brainstormed, however, when thinking about restaurants and franchises the first idea was born. Five Guys Hamburgers and Fries seems the perfect fit for Ireland and there began my...

Social Problems of the Troubles in Ireland

2263 words - 9 pages Social Problems of the Troubles in Ireland For about 150 years Ireland and neighboring countries have struggled with social controversy and segregation that has consumed society and its views, which have been labeled as the “Troubles”. Ireland has struggled to become peaceful and accept the ties it has to the United Kingdom. In every country there is hate, wars, and events that cause the population to raise up arms and try to get their points...

Eamon De Valera and the Rebirth of Independent Ireland

2666 words - 11 pages Eamon De Valera and the Rebirth of Independent Ireland When Eamon De Valera’s died in 1975, Ireland lost its most successful and most prominent patriot and nationalist. In his life, he played many roles: a dedicated teacher, statesman, president of Eire and Ireland, Prime Minister, soldier and provocateur. He is probably best remembered for his part in the 1916 Easter Rebellion and the civil war that divided Ireland from 1922-23, but did...

Overview of the Republic of Ireland and its Business Culture

2748 words - 11 pages Executive Summary The Republic of Ireland consists of twenty-six counties and is located on the island of Ireland, along with Northern Ireland. Ireland is a parliamentary democracy, made up of three branches of government: the executive branch, the legislative branch and the judicial branch. The executive branch consists of the President, who is mostly there for ceremonial purposes, the Prime Minister, who is the head of the government, and the...

The re-emergence of the land question in Ireland.

1167 words - 5 pages This briefing examines the history of the Irish land question and its re-emergence in recent years, as a background to an international conference: Land, The Claim of the Community to be held at the Tara Towers Hotel, Booterstown, Dublin on 9th and 10th October 2003.The first land reform?The history of Ireland must be based on a study of the...

Ireland Starves and Lives to Tell: The Effects of the Great Potato Famine

1761 words - 7 pages Ireland Starves and Lives to Tell: The Effects of the Great Potato Famine “It must be understood that we cannot feed the people” (Kinealy Calamity 75). The mid 1800s in Ireland were characterized by extreme poverty, death, and emigration. The Great Potato Famine, also known as “The Great Hunger,” first hit in 1845; however, its effects lasted into the 1850s and can still be seen today. Prior to the famine, Irish manufacture and...

A Modest Proposal- swift

559 words - 2 pages A Modest Proposal was an essay based on satire,by Jonathan Swift. He depicted the horrific conditions of Ireland and the lives of the Irish people in 1729. The problem being...

The Call for the Gaelic League

1704 words - 7 pages The Call for the Gaelic League What would the United States be like if Americans couldn’t practice their customs, culture, or even appreciate their heritage? Granted the United States is a “melting pot” for several ethnicities, but some native countries and cultures have faced this type of dilemma. The Spanish influence on the Aztecs and the English on Native Americans are two examples of this imperialistic move. If only these cultures had a...

'The constitutional revolution of 1782 can credibly be presented as the immediate reason for the Act of Union eighteen years later.' (Sean Connolly). Do you agree?

1943 words - 8 pages 'The constitutional revolution of 1782 can credibly be presented as the immediate reason for the Act of Union eighteen years later.' (Sean Connolly). Do you agree?The act of union, one could strongly argue, is the defining event of modern Irish history. It brought into effect the United Kingdom of Great...

Culture of Ireland

3555 words - 14 pages Ireland This paper will investigate the culture of Ireland by taking a look at the five characteristics. Each characteristic will be allotted its own subsections. The first section will encompass the history to illuminate the connection of a country’s struggle and their learned culture. I will communicate the key aspects that connect an individual culture to the region of the world it inhabits in the second section. In the third section, the...

The World Economic Crisis: A Marxist Analysis

3354 words - 13 pages A financial crisis developed with an amazing speed starting from the late summer and early autumn of 2008 and it still affects the world today. This crisis has damaged many of the largest financial institutions firstly in the US and the whole world then followed, but the worst damage was that a large part of the world's financial system had almost collapse. A lot of researches tried to explain the reasons of the current global crises and try to...

One thought on “Essays On Irelands Economy

Leave a comment

L'indirizzo email non verrà pubblicato. I campi obbligatori sono contrassegnati *