Introduction: The Collapse of the Irish Model

Abstract

The year 2008 was a year of rude awakening for the citizens of Ireland. After a decade-and-a-half of high economic growth which had seen the country become the envy of many around the world and was looked to by policy-makers as a model of successful development in this globalised era, the final months of 2008 brought humiliating collapse. The Irish, who had grown used to glowing praise by foreign leaders and the international media, now had to adjust to the realities of being not only in one of the most severe economic downturns in the European Union but in a depression that was estimated by the prestigious Economic and Social Research Institute (ESRI) would see Ireland’s economy contract by around 14 per cent between 2008 and 2010 which they described as being ‘by historic and international standards … a truly dramatic development’ (Barrett et al., 2009: 32). European Commission figures showed a decline of 2.3 per cent in Ireland’s GDP in 2008, a forecast decline of nine per cent for 2009 and a further decline of 2.6 per cent in 2010. This put Ireland just behind the three Baltic states for the depth of its economic depression over these three years but Ireland found itself in the worst position in the EU in terms of its budget deficit. After years of running a budget surplus, the country’s public finances dramatically worsened in 2008 with a deficit that reached 7.1 per cent of GDP; the European Commission forecast in spring 2009 that this would reach 15.6 per cent of GDP by 2010, making it impossible to know when Ireland might return to the EU limit of three per cent of GDP.