Unemployment in Ireland falls to 6.8%, Record lowest since 2008.

Ireland's crisis was basically;

  • 1. Global credit crunch happens.
  • 2. Housing prices in Ireland start to drop.
  • 3. Government (realizing there's a shit ton of sub prime debt lying around) decides to guarantee €400 billion worth of bank deposits, hoping that the crisis is just a blip.
  • 4. Global crisis isn't just a blip. Government starts having to pump money into the banks to prevent total societal collapse.
  • 5. Country's national debt rises from 23.6% of GDP to 90% of GDP in 3 years.
  • 6. Lenders get spooked. Stop lending to Irish banks. Government bonds spike.
  • 7. Businesses can no longer borrow money for day to day things. They start laying off staff. Government can't borrow money to run the state so the EU and the IMF step in.
  • 8. Painful austerity is implemented, which helps the government's position but puts even more pressure on the economy itself.
  • 9. Businesses still can't borrow money and unemployment rises from 4.5% in 2007 to 15.1% in the middle of 2012.
  • 10. (Here's the controversial part) The government's willingness to implement austerity and the relatively stability of the political system starts to make international lenders feel like Ireland is stable and that its problems were the result of the crisis, not chronic economic malaise. They start investing again and buying up property left, right and centre. Government bond yields drop to extremely low levels. The economy begins to grow again and bank credit lines start to open up.
  • 11. Businesses start being able to resume normal operations and as the overcorrection in the housing market and the economy becomes clearer the pace of growth picks up to rapid levels. Unemployment falls dramatically over the course of 5 years.

The point I'm trying to make with this is to illustrate how different Ireland's situation is to that in most of Southern Europe. It's a very globalized place, the most globalized country in the world according to some rankings. It needed at least some austerity to ensure that there wouldn't be massive capital flight --because global business requires stable government policy. So when Brussels inevitably holds this up as an example of what austerity can do it's incredibly irresponsible. 5 million problems led to the situations in places like Greece and Italy. 1 big problem led to the crisis in Ireland. To try and solve them the same way won't work. Any kind of stable political situation would have brought Ireland's unemployment rate down to normal levels. Southern Europe needs something akin to the Marshall Plan. You can't expect places with decades of political instability to wake up one day and act like Germans.

This is a giant rant for an unemployment figure, I know, but I think there's a base misunderstanding on how to solve unemployment in countries that haven't yet caught up structurally with Northern Europe. Fiscal discipline is necessary but not so much that some countries are teetering on the edge of electing fascists.

/r/europe Thread Link - cso.ie