In mid-2008 Ireland began to experience a dramatic reversal of fortune after the Celtic tiger period of 1995 – 2007. This dramatic reversal of fortune was brought about by the following four main causes: 1. The Irish Banking Sector goes into Crisis
Ireland has suffered one of the most catastrophic experiences of financial crisis in the developed world, in September 2008. In the years preceding our economies demise, we as a country witnessed a staggering increase in bank lending, credit extension practices and other banking activities which intern lead to our major economic downturn. Once this economic downturn took place it spread immediately and many of the country’s major firms fell into liquidation and receivership, which led to workers being made redundant and other left unemployed leaving our country with its highest unemployment figures in the past decade, making resolving our banking sector crisis even more difficult.
The above graph represents the rise in Irish unemployment from 1983 – 2008.
2. The Housing Bubble Bursts
The citizens of Ireland witnessed an enormous ‘boom’ in the housing industry during the Celtic Tiger years. Through the years 1995 – 2007, housing estates were being constructed at an astonishing rate with just under 750,000 houses being constructed in this period. However the fairy-tale story that once was the construction industry came crashing down in 2008, when it was realised that the supply of houses was far greater than the demand leaving to date roughly 294,000 houses without tenants. With the demand for houses proving to be non-existent we witnessed a massive price fall in the housing industry, with price houses falling 64% on their market peak price in 2007.
The above graph represents the rise and falls of the prices of housing...