Having been bailed out by the EU, and with confidence in its banking sector and government decimated, these are trying times for the people of Ireland. Now, The Journal takes a look at the events that led to the economic implosion of the island.
Ireland officially went into recession in September 2008 with a Fianna Faíl (Green Party) coalition at the helm. The downturn was preceded by the most economically prosperous era in the Republic’s history.
The Celtic Tiger had been roaring since the early nineties, largely thanks to Ireland’s low corporate tax: at 12 per cent it was the lowest in the EU. This led to massive investment from multi national companies, and the boom drove the minimum wage up and up, peaking at almost nine euros per hour in 2007. At this point the standard of living in Ireland was one of the world's highest.
The recession hit Ireland hard, and a culture of banks lending money to developers almost completely on credit was exposed. Many of the corporations that brought their riches to Ireland moved their business elsewhere, notably Dell to Poland, and unemployment soared.
The next 12 months saw three emergency budgets, with approximately €8 billion in cuts.
The country’s largest bank, Anglo Irish, was nationalised after it suffered massive losses, a collapse in share price due to a scandal over loans to company directors, and fury over bonuses given to top-level executives.
A surge in emigration from the country followed, reaching the highest levels since the 1980s. Among the worst hit were tradesmen who had just finished their apprenticeship.
Tina Mullins from Kildare, Ireland, has seen her son Barry, a newly qualified joiner, be forced to go to Australia to make a living for himself. She told The Journal: “I was devastated at first but could see the sense in it. The country has left countless young men like Barry out to hang, so why would he fail himself by trekking into the dole office to lift the weekly pittance.”
Tina doubts that her son will return home for more than a holiday anytime soon: “There’s plenty of work out there for them. He can go start a family and have a real go at life. Barry’s got a chance that many don’t, and many more won’t.”
Damian O’Loughlin, originally from Wexford, Ireland, is a recent immigrant to Australia. He has 20 years experience as a senior civil engineer. As with many Irish, he feels disenchanted by how warning signs of a bust were not heeded. Speaking to The Journal, he said: “We got incredibly greedy. Second houses, cars, what was the point? They were told it wasn‘t sustainable, but there was no proper warning to the workers.
“Young people going to college weren’t told that degrees in civil and construction engineering were going to be worthless to them without a visa for Australia or Canada.”
With the public showing major contempt toward politicians and bankers alike, the coalition was in free fall, and September 2010 signalled the beginning of the end.
Taoiseach (Irish Prime Minister) Brian Cowen hit headlines worldwide after being forced to deny being drunk whilst appearing on a morning radio show, the night after a Fianna Faíl conference.
When challenged about the allegations at a press conference, Cowen’s response was very short:
“I’m sorry. Absolutely not. I mean that’s ridiculous. It’s not true at all. Please.”
Opposition Fine Gael politician Simon Coveney posted a comment on Twitter saying Cowen had been “half way between drunk and hungover and totally disinterested” at the interview.
In November, a week after denying that the government had approached the European community for emergency funds, Cowen accepted an 85 billion euro bail out package to keep the country afloat.
In December this was followed by Budget 2011, the most draconian in the state’s history and the most telling example of just how backwards things had gone, and at a time when the majority of Europe’s economies had finally started growing again.
The first month of this year has seen the country enter a period of flux. Things have moved fast as the other political parties endeavoured to usurp Fianna Faíl. The Green Party, under pressure from Sinn Féin, Labour and Fine Gael, abandoned the coalition, forcing a general election.
Taoiseach Cowen has resigned as leader of Fianna Faíl, but decided to carry on as the country's leader. He cited the need to get the Finance Bill, a crucial element of the bailout, through the Seannad (Irish Senate) as justification for this decision.
The bill was passed and the government was dissolved on 1 February. A general election will take place on Friday 25 February.
Economists have given an optimistic estimate that the country will be back on its feet in about 15 years time.