Causes and Consequences to the Irish Recession

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Since the turn of the millennium Ireland witnessed unprecedented growth, in stark contrast to the economic hardship of the 1900’s. Ireland became one of the most prosperous countries in Europe during the 2000’s. Times were good for Ireland as unemployment was low, growth and GDP was growing year on year and inflation was constant. In 2008, all this was to change and Ireland witnessed the worst recession in its history. The banking crisis, the construction sector and poor regulation were the major contributors in the Irish recession. A fiscal crisis erupted, NAMA (National Assets Management Agency) was established to secure bad loans in banks, and a EU/IMF bailout was agreed which burdened Irish taxpayers. I will explore the causes and consequences of the crisis in this essay.
‘The Celtic Tiger’ was the term used by Irish people to describe the rapid growth Ireland was witnessing. Ireland was referred to as ‘Europe’s shining light’ since the start of the Celtic Tiger. It had only been 10 years prior to this that Ireland had been branded as the’ poorest of the rich’ in Europe (Ireland shines, 1997). Open-minded industrial policy targeted MNC (Multi National Companies) to locate in Ireland around 1987. The government had decided Ireland would become a knowledge based, export driven economy. After the 90’s Ireland witnessed major growth and Irelands harsh economy of 1987 when unemployment was 18%, national debt was 125% of GNP and growth averaged 0.2% of 5years seemed a long time ago (Murphy, 2000).
Around the turn of the millennium Ireland had a small housing stock, with the figure being the smallest in Europe. With income growing and the population increasing the EMU allowed Irish financial lenders to offer mortgages to customers ...

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...outward migration has grown steadily (Wp.sme.ie, 2014). Ireland has seen the collapse of Irish exports despite the weakening of the Euro imports decreased and exports increased. Ireland has also faced difficulties in the international financial market after the crisis as it lost some of its credibility. This was reflected by Ireland bond yields, which increased to a dangerous high of just under 12% in 2011 (Tradingeconomics.com, 2014).
Irish people will never forget the financial crisis of 2008 in Ireland. A lax regime that let bankers be reckless, an over-dependence on the construction industry and little regulation harmed Irelands economy greatly. However, it is important that Ireland learns from its self-inflicted mistakes and re-builds its institutions. The economy has shown signs that it is improving and Ireland completed its EU-IMF bailout in December 2013.

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