At the receiving end—Irish perspectives and response to the banking and sovereign debt crises

Having enjoyed nearly two decades of economic recovery and rapid development as one of the most successful member-states of the European Union, Ireland was shocked and chastened by the global financial crisis of 2007–2008 and its traumatic impact on the country. A threefold crisis assailed its economic and political elites and citizens when the property bubble built up since 2002 exploded 6 years later. Its banking system collapsed through over-exposure to loans built up from the cheap credit made available after the euro was introduced. There was an immediate impact on state revenues when property-related windfall taxes collapsed under this pressure, exposing a yawning gap between current expenditure and revenues. And the country’s economic competitiveness suffered from a runaway cost base. The paper puts these events in the context of Ireland’s overall experience of European integration and its economic development. It goes on to explain how Ireland got into trouble in 2008 and tracks the major events over the next 3 years and how they were handled. Three major axes of argument about the EU/IMF rescue packages are discussed, highlighting the views of political leaders and public opinion dealing with the intensified euro zone crisis in autumn 2011. The paper goes on to assess their attitudes to EU decision-making, the role of the European Central Bank, the prospects of treaty change and Ireland’s emerging position in a reconfigured Europe coming to terms with a more multi-polar world.