Economic Recession in Ireland 2007-2012

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“Ireland’s Great Recession.”
The Irish Economy, 2007-2012.

The title of this essay, “Ireland’s great recession,” refers to the Irish economy from 2007-2012. From my research into this essay, I found that the Irish economy of this period could be referred to as “The Great Depression.” There are parallel similarities to the Irish economy now as experienced in America in the 1920’s. This essay will examine what a recession is, why Ireland is in a recession, the effects and face of the recession, and my own personal views on the crisis. Not a day goes by when you don’t hear stories of “doom and gloom” in relation to Ireland’s economic state of affairs. Everybody you talk to has someone belonging to them or knows someone who has had to emigrate. Australia has replaced America as the land of hope and dreams, as thousands flock our shores in search of a better life. Within the country recession has not only resulted in mass emigration. Internally people are struggling to repay their mortgages because of the housing collapse. Wages have been cut and taxes have been increased. Disposable income for many a non-entity. Ireland was the first EU country to declare itself officially in recession in August 2008. We are the second EU country to have a structural adjustment programme imposed by the IMF/ECB/EU, known as ‘the Troika’. The turnaround of the Irish economy has been dramatic - from one with the highest levels of GDP and employment growth to among those with the highest unemployment, emigration and debt levels across the EU - in the space of just a few short years. The recession has affected everybody, young and old. We are in a time where we have to cut spending in order to meet our EU obligations. The financial crisis that sparked the recession and collapse of our banking system is the most serious problem that we face. The Calm before the Storm- The Celtic Tiger Years(1995-2007) “The Celtic Tiger” was a term used to describe the boom years which our economy went through from around 1995-2007. UK economist Kevin Gardiner coined the term “Celtic Tiger”, comparing Ireland's unexpected economic take-off to the Asian tiger economies. Many believe the foundations of the Celtic Tiger were laid in the 1990’s in a Dublin pub called Nesbitts. It was here that politicians, economists and civil servants met to discuss future government policies. It was agreed that the government of the day should cut taxes, lower interest rates, reduce import duties which would encourage foreign investment. It was later referred to as the “Doheny & Nesbitt School of Economics.” Our generous corporation tax of 12.5% enticed foreign investment into the country. The fact that Ireland was a member of the European Union since 1973 helped enormously. The EU pumped vast amounts of money into infrastructure and grants especially in the agricultural sector. It meant a single currency and free trade within the EU. Ireland had an open economy where trade was promoted and thrived, especially in the area of exports. Ireland has a workforce that is highly educated and attracted further investment especially from high-tech and pharmaceutical industries. As the economy started to grow so did immigration into the country, as there was lots of work particularly in the construction industry. There was a surge in demand for housing and as a result this triggered the housing boom. Banks were encouraging customers to borrow as there were low interest rates. Property prices began to rise and many people sought property as a form of investment not just as a home. Property developers became millionaires over night as a result of the property boom. People in Ireland began living lavish lifestyles and in a lot of cases had lost the run of themselves. Collapse of the World Financial Market

On the 15th of September, 2008 Lehman Brothers, one of America Largest Investment Banks in the USA, declared itself bankrupt. Major panic broke out on the inter-bank loan market as a...
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