This essay will deal with the changes that Ireland has faced over the last 9 years; from 2008 to 2017. Ireland’s history has seen economic “booms” and, unfortunately, its fair share of economic recessions. 2008 saw the start of one of the worst crashes in the country’s economic history. Masters (2009) described Ireland as “being battered by international storms the likes of which this generation has never seen.” There were an abundance of reasons as to why the country went into meltdown. Over-lending by the banks sent the banks into a financial crisis, one which the country is yet to fully recover from. Unemployment skyrocketed and many businesses were forced to declare bankruptcy. In recent years Ireland has begun recover and address most of the damage done almost a decade ago, but there are still many consequences that can be seen in the country. This has had many impacts on the country; including impacts from a political, cultural, population and economical point of view. This essay will deal with the causes, consequences and spatial implications of these changes in Ireland. It will do this with regard to those impacts as they help to shape the society we live in and our daily lives.
First we must look at the cause of these changes in Ireland starting in 2008. The economic crash changed our economy for years to come. It all started with the economic boom that ended in 2007. The banking system was spiralling out of control. The international credit boom saw economies experience a rapid rise in bank lending with loans increasing to 200 per cent of GDP on average in Ireland by 2008 (Kelly, 2010). The housing market excelled. A lot of these loans were being given to property developers for construction of house, impacting the housing prices throughout the country dramatically. Kelly (2010) stated that by the bubble peak in late 2006, the average first time buyer mortgage had risen by 8 times average earning, and the average new house now cost 10 times average earnings, with the average Dublin second hand house costing 17 times average earnings. This boosted the economy profoundly. The Irish political leadership first acknowledged the impact of the global financial crisis on Ireland after a sharp fall in government revenue in July 2008 (Masters, 2009). This was the official end of the “The Celtic Tiger”, something that was associated with Irish cultural identity throughout those years. According to Boss (2011) the new national self-confidence was a reflection of how Ireland had finally managed to liberate itself form its long dependence on Britain. The Celtic Tiger was something to which the Irish population was proud of. Eventually the banks were plagued with debt that was unable to be paid back, and the banks collapsed. This was the beginning of the economic crisis. Masters (2009) stated that blame for the turbulence in global financial markets was attributed to the effects of the US sub-prime crisis and the toxic debt instruments backed by the US mortgages. Ireland was being effected by the rest of the world and was seeking any form of relief. The Irish government received a bailout, but that only solved one of many problem. The financial crisis, the bust of the property bubble, the recession, the near-bankruptcy of the state, the revelations of political ineptitude, widespread corruption and cronyism were all factors which have contributed to the collapsed Celtic Tiger narrative and made people realise that, not only was the economy based on a mirage, but so were their own decisions as consumers and citizens (Boss, 2011). The economic recession of 2008 is a very complex issue that has many factors and traits . It was down to the Celtic Tiger as the ultimate push for the recession to happen. Banks and people got carried away in property development and other construction and, in the end, were not able to follow through with their expectations.
Boss (2011) stated that Irish institutions eroded social cohesion and contributed to enhancing special interests as well as a culture of greed and individualism, instead of enhancing solidarity.
The recession had huge consequences for the country. House prices dropped dramatically and unemployment rose to above 15 per cent in the coming years. Banks were also severely affected. Kelly (2010) stated that the collapse of the building boom left Irish banks facing large loses to builders and developers. Because of these loses, share prices in the banks, especially Anglo-Irish Bank, began to decreased steeply. The amounts that banks received, particularly for development land, could be considerably less than the 70 per cent first envisaged, and the first tranche of loans transferred in April 2009 had haircuts of around 50 per cent. Banks have suffered huge losses and then increased borrowing to fund the increased lending, almost sending them into bankruptcy. They required immediate assistance from NAMA. Between them, AIB, Bank of Ireland and the nationalised Anglo Irish bank had 31.2 Billion of bonds maturing in 2010 and in addition the state will have to borrow about 20 Billion (Kelly, 2010). From a social point of view, the Irish population was affected just as much as the banks. Most of the country’s residents were left crippled by debt and bad investments. Irish firms and households acquired substantial amounts of debts to buy property that has now decreased sharply in value. The money that people had invested basically disappeared. Another huge social impact was migration. During the Celtic Tiger, Ireland was a hub of Immigration. Gilmartin (2013) pointed out that ‘Migration Nation’ was the phrase used to describe the consequences of this movement of people. However after the economic crash of 2008, this term was no longer applicable to Ireland. It was the first time in decades that net emigration exceeded net migration. This was a huge consequence for the state as the majority of these people was part of the labour force, in search of jobs because the unemployment rate and wage cuts left them unable to support themselves. After the main crash in 2008-09 emigration began to scale back. Gilmartin (2013) said that while the level of migration of men from Ireland rose very rapidly between 2008 and 2009, this increase has now flattened out. This rise could be attributed to men moving abroad to work and send remittances back home to Ireland to their families. Fortunately for Ireland now, as the recession moves further into the past, many emigrants are returning to Ireland. As mentioned above, unemployment rates and wages cuts were the main culprit for such high levels of emigration. Fitzgerald (2009) believed that ‘if cuts in public sector pay rates mirrored cuts in private sector wage rates there would be a very significant gain in competitiveness, with a big reduction in unemployment after three or four years’. However union resistance was inevitable and people only agreed after the state cuts wages for their workers first. These pay cuts were a major push factor towards migration for people who could not support themselves. This consequence would prove huge for the Irish economy, who lost government income due to the loss of taxes and household expenditure. These consequences would shape the country for many tough years to come.
However the emerging patterns of residential concentration in Ireland could lead to future problems around access to resources and services, and around the quality of life in such areas (Gilmartin, 2013). The National Spatial Strategy (NSS) set out an ambitious but realistic vision for the future development of Ireland. This plan has been set in place since 2002 and attempts combat any implications relating to migration in recent years. It aims to balance social,
economic and physical development in Ireland. However the creators of the NSS could never have pictured the breakdown that the economy was to face a few years after the creation of the strategy. Convery, McInerney, Sokol and Stafford (2006) stated that policy has been much less successful at organising the space in which this growth has taken place: the failure has been especially pronounced in the Greater Dublin Region. A number of experts form a range of public and private agencies met in focus groups to look forward, and concluded that the economic achievements of the past would be unlikely to continue, because traffic congestion, longer distance commuting, housing that is both expensive and poorly designed are all combining to reduce mobility in the labour force and diminish quality of life, and the governance mechanisms in place will not effectively address these challenges (Convery et al., 2006). This conclusion is still relevant today, almost 10 years after the crash. Migration to the city capital, Dublin, has skyrocketed. The country is experiencing a brain drain of the peripheral locations. The capital can barely cope with this, let alone the immigration of people in search of a better life. Dublin is expanding at a profound rate. Towns up to an hour away by car are now being transformed into commuter towns, including Arklow, Wicklow and Gorey. Dublin will continue to grow at this alarming rate, so the government needs to find a more successful resolution. This resolution must address the issue with traffic congestions and long distance commuting in order to have any impact. Both the recession and the Celtic Tiger have caused these spatial implications. As the country returns back to normal and the economy begins to revive itself, the situation will only worsen. Convery et al. (2006) pose the biggest question as to whether the current the current trends in spatial development are socially, economically and environmentally sustainable and whether polycentricism can be the normative answer to the challenges which are faced by the Greater Dublin Area.
This essay has examined the biggest change in Ireland from 2008 to 2017: the collapse of the Irish economy. It has focused on the causes of this this recession and then paid attention to the consequences of the crash on Ireland as a whole; socially, economically and from the aspect of the population. Ireland has suffered a great deal over the last 10 years. The root of the problems it faced were down to over-lending from the banks. With accumulating debts and a lack of policies set in place to avoid a situation like this, the government was forced to step in and inject billions of euro into the financial sector. With an amassing of problems, the economy went into meltdown. This ultimately caused shutdown of the banks, a sharp increase in unemployment and for Ireland to become a net emigration country for the first time in decades. Spatial implications that already existed became worse as the situation unfolded. Traffic congestion and commuter towns are becoming a norm in society and will only worsen with time. I hope this essay has dealt with these topics in a clear and concise manner.
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Kelly, M. (2010). ‘What Happened to Ireland’, CEPR Discussion Paper No.7811, pp 1-30.
Boss, M. (2011). ‘The Collapse of ‘Celtic Tiger’ Narrative’, Nordic Irish Studies, Vol.11, pp119-135. Available at: https://www.jstor.org/stable/pdf/41702671.pdf?refreqid=excelsior%3Aa74264c069d803429a326a536f9b5b76. (Accessed on: 12 April 2018).
Gilmartin, M. (2013). ‘Changing Ireland, 2000:2012: immigration, emigration and inequality’, Irish Geography, 46:1-2, pp. 91-111.
Fitzgerald, J. (2009) “How Ireland Can Stage an Economic Recovery’, Irish Times, 24 January.
Convery, F., McInerney, D., Sokol, M., & Stafford, P. (2006). ‘ Organizing Space in a Dynamic Economy: Insight for Policy form the Irish Experience’. Built Environment, 32(2), pp. 172-183. Available at: http://www.jstor.org/stable/pdf/23289399.pdf?refreqid=excelsior%3A540b5b3b3716738082f294c59c4f5eda. (Accessed on 13 April 2018).