Irish Economy

17 Nov

Back in 2008 right after Ireland declared a recession, Ireland announced a bailout of four hundred billion euros to stabilize its six largest banks.  More funding continued several years afterwards with more money being put into to the banks to stabilize them.  Because of this, the Irish government has made significant cutbacks in the budget over the past five years including the most recent of 3.5 billion euros in the 2013 budget.  Just at the beginning of August 2013 the Bank of Ireland announced it was a “normal” bank once again.  Predictions are made that by 2014 the Bank of Ireland will be profitable.  According to Mark Paul and Ciara O’Brien from the Irish Times, “The interest margin from the Bank of Ireland has increased, they have reduced its impairment charges across most of its categories, and it continues to pay back its debt. As long as the banks keep on the path they are currently on the outlook for the future is bright.”  Ireland must ensure that the banks continue to stay healthy to free up funds for the government to invest in growth in other sectors and to payoff debt.

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To reduce its large deficit Ireland is using the policy of austerity.  Austerity is described as a mechanism to cut spending and increase taxes.  According to economist.com, “Since 2008, successive Irish governments, in seven budgets, have taken €28 billion ($38 billion) out of the economy in spending cuts and tax rises, which amounts to 17% of today’s GDP.”  Indicators show that this time right now is marking the end of an economic emergency.  According to the economist.com, “The economy moved out of recession in the second quarter of 2013, with 2% GDP growth forecast for 2014. Unemployment, which peaked at over 15% in 2012, fell to 13.3% in September 2013.”  2.5 billion euros have been cut from the Irish economy in the 2014 budget, but Michael Noonan said that it could have been much worse.  The only reason it was not is because he believed the Irish people have suffered enough in cutbacks in recent years.

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-Anna Wilhite

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