From Celtic Tiger to EU/IMF Bailout: Ireland and the Euro Crisis

1. From Celtic Tiger to EU/IMF Bailout: Ireland and the Euro Crisis Prof. Gary Murphy Dublin City University Visiting Fulbright Scholar, Center for European Studies, UNC, Chapel Hill

2. Ireland - Europe

3. Ireland and Europe • Ireland, a poor agricultural state on the European Periphery with protected industry applies to join EEC in 1961 – Eventually gains membership in 1973 • Entry to Europe in 1973 key date in opening up Ireland politically, economically, socially

4. Ireland and Europe • Economic Crisis in the 1980s – mass emigration and unemployment • Celtic Tiger Phenomenon – 1996-2006, based on EU membership, FDI, well educated population, cheap credit – result property boom • Shuddering bust in 2008 – state guarantees obligations of banks

5. Modern Ireland: August 1939

6. Lemass: The Moderniser

7. Foreign Direct Investment

8. The Politics of Modern Ireland • Ireland dominated politically by Fianna Fáil • In power for 60 of its 84 year existence. The most successful political party in western Europe • Collapsed in 2011 election – vote reduced by a quarter to 17 per cent. Lost 58 seats in a parliament of 166 falling to an all time low of 20: Why? Let’s Look:

9. Monthly Poll Averages 2007-2011

10. Government Satisfaction Rating 2008-2011

11. Economic Growth

12. The Housing Bubble

13. Bank Lending to Households % of GDP

14. Spectre of Unemployment

15. Ireland: November 2010

16. Protest: Not a new phenomenon

17. But the results are! • November 2010 – state accepts loan guarantee from IMF, EU, ECB. Known popularly as “the bailout”. Access to a loan of up to €85 billion • Ireland could not sustainably borrow on bond markets hence bailout • Result: Irish state must deliver targets agreed with “Troika” – an effective loss of sovereignty that seemed to be copperfastened by entry to EEC in 1973

18. New Government: Back to the Future • Fine Gael and Labour with massive majority are now basically implementing programme agreed by Fianna Fáil • The politics of austerity. Massive cuts in welfare programmes, public service pay and numbers • Full payment of bank bondholders

19. Ireland: the best boys in the class • The Troika

20. Ireland: The Future • Survival of the Euro: very much in Ireland’s interests and to its benefit • While there is much public unrest at bailout, there is very little alternative • Ireland: “a country in receivership” as minister for education notes • But the politics of austerity itself could hinder recovery as people afraid to spend

21. Ireland: The Balance Sheet On the debit side • Crippling bank debt has become public debt – total Irish debt close to $250 billion • Mass unemployment and significant emigration • A people with little hope?

22. Ireland: The Balance Sheet On the credit side • At least has a a credit supply from the Troika so services can continue • Protected to some extent by EU membership and the Euro • Low corporate tax rate and significant US investment • A well educated people with natural optimism?

23. Thank you Gary.Murphy@dcu.ie