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Ireland's bailout: cause and consequences

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Ireland's bailout: cause and consequences
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The first eurozone country to officially enter recession in September 2008, Ireland’s economic nightmare began with the bursting of its property bubble. Prompted by the banking crisis, the sudden halt to the previous decades high levels of growth was a shock. Affectionately dubbed the Celtic Tiger, up until 2 years ago, Ireland was one of the most prosperous places to be in Europe. Revenue per capita overtook both Germany and the UK, while the minimum wage became the highest in Europe. A key ingredient to this success was low corporate taxes. An iconic 12.5 percent rate helping to attract many, mainly US multi-nationals.

In 2009, it brought nearly 4 billion euros in to government coffers. This year it has dropped significantly by almost a quarter despite still representing about a tenth of the Irish government’s income.

The trouble started when Dublin was forced to rescue the country’s banks, notably Anglo Irish Bank, which was nationalised. A 50 billion euro bailout saw Ireland’s budget deficit rocket to more than 30 percent of annual GDP. The result was a government austerity overdrive, introduced during last year’s December budget.

Initially reduced by 5 percent, civil servants salaries were further chopped by 15 percent. That saved around one billion euros. A cut to unemployment benefit also saw some 660 million saved.

Since 2008, the jobless rate has soared forcing many people to think about the option of emigrating.

“Oh, I consider emigration, I believe Australia, Canada, there are more opportunities, there is more work there, and possibly it is better in the longterm,” said Gerry Kitterick, a construction worker.

But, it’s not just the building sector, the tough economic climate has also hit Ireland’s highly skilled workers.

Sophia Millington-Ward, a researcher at the University of Dublin, said: “I would say about 40% of people in my field which is genetics research, are struggling and are looking elsewhere and are moving.”

Thousands flocked to Ireland during the boom times. Now those immigrants and the Irish themselves appear to be leaving at an alarming rate.

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