Ireland’s sorely remembered economic catastrophe during the eurozone’s sovereign debt and banking crisis of 2009-11 gives good reason for playing it safe. Once bitten, twice shy.
Rewind to the preceding decade, and much like today, Ireland’s economy was widely seen as a model for others to replicate. Known as the “Celtic Tiger”, after the fast growth tiger economies of the Far East, Ireland’s example was repeatedly cited by Alex Salmond, then Scotland’s first minister, as evidence of how Scotland too could thrive once free of Westminster’s yoke.
Scotland would form part of some great “arc of prosperity”, pontificated Salmond, that would stretch from Ireland in the south, through Scotland and then down through the nordics to Denmark and beyond, notably bypassing a once-dominant England.
Barely had he said it, the southern part of the arc went up in flames. As it turned out, Ireland’s economic miracle – fanned by the one size fits all absurdities of Europe’s single currency – had been substantially based on unrestricted credit. In the following meltdown, economic output collapsed, unemployment surged to 15pc, and the national debt ballooned to more than 120 percent of GDP.
Speculation mounted that Ireland would be forced to leave the euro, and heaven forbid, perhaps, even rejoin the pound, though this latter eventuality was perhaps always more a case of wishful thinking by British eurosceptics than a real possibility. Most of the political class in Ireland would rather eat glass than contemplate such a humiliating return to past dependence. Old grievances die hard.
The fall from grace was extreme; the Celtic Tiger label went extinct, to be replaced by inclusion among the PIIGS, the derogatory term used to describe the failing economies of Portugal, Italy, Ireland, Greece and Spain.
Yet after a period of punishing austerity, the Irish economy came bouncing back, and today once again enjoys full employment, high labour market participation, and relatively fast growth. The public finances, moreover, are blessed with a substantial and seemingly ongoing budget surplus.
These surpluses have already succeeded in reducing the national debt to 80pc of Gross National Income. Using an admittedly somewhat different measure, the International Monetary Fund forecasts that the ratio will carry on falling, reaching less than 20pc of GDP by 2028. It is the sort of debt trajectory of which Jeremy Hunt can only dream.
Ireland’s resurgence is setting an example for broke Britain
[ad_1]
Ireland’s sorely remembered economic catastrophe during the eurozone’s sovereign debt and banking crisis of 2009-11 gives good reason for playing it safe. Once bitten, twice shy.
Rewind to the preceding decade, and much like today, Ireland’s economy was widely seen as a model for others to replicate. Known as the “Celtic Tiger”, after the fast growth tiger economies of the Far East, Ireland’s example was repeatedly cited by Alex Salmond, then Scotland’s first minister, as evidence of how Scotland too could thrive once free of Westminster’s yoke.
Scotland would form part of some great “arc of prosperity”, pontificated Salmond, that would stretch from Ireland in the south, through Scotland and then down through the nordics to Denmark and beyond, notably bypassing a once-dominant England.
Barely had he said it, the southern part of the arc went up in flames. As it turned out, Ireland’s economic miracle – fanned by the one size fits all absurdities of Europe’s single currency – had been substantially based on unrestricted credit. In the following meltdown, economic output collapsed, unemployment surged to 15pc, and the national debt ballooned to more than 120 percent of GDP.
Speculation mounted that Ireland would be forced to leave the euro, and heaven forbid, perhaps, even rejoin the pound, though this latter eventuality was perhaps always more a case of wishful thinking by British eurosceptics than a real possibility. Most of the political class in Ireland would rather eat glass than contemplate such a humiliating return to past dependence. Old grievances die hard.
The fall from grace was extreme; the Celtic Tiger label went extinct, to be replaced by inclusion among the PIIGS, the derogatory term used to describe the failing economies of Portugal, Italy, Ireland, Greece and Spain.
Yet after a period of punishing austerity, the Irish economy came bouncing back, and today once again enjoys full employment, high labour market participation, and relatively fast growth. The public finances, moreover, are blessed with a substantial and seemingly ongoing budget surplus.
These surpluses have already succeeded in reducing the national debt to 80pc of Gross National Income. Using an admittedly somewhat different measure, the International Monetary Fund forecasts that the ratio will carry on falling, reaching less than 20pc of GDP by 2028. It is the sort of debt trajectory of which Jeremy Hunt can only dream.
[ad_2]
Source link