Is Ireland living beyond its means?
Ireland is one of the most developed countries in the world and has a high tax high government service economic model, it has for the last few decades substantially reduced the socio-economic inequalities in the economy and had a Gini coefficient score of 30.1 in 2000 while The Economist says we have the best quality of life in the world. This has come at a cost though, government deficits are running at over 10% of GDP, public debt accounts for over 40% of all revenue generated in the economy and the Irish population has a debt level, in relation to disposable income, that is the highest in the developed world – our personal debt in 190% more than our disposable income. All this begs the question, are we living within our means or is Ireland’s economic model unsustainable?
Unprecedented growth throughout the 1990s earned the country a reputation as a Celtic Tiger. But now it appears the Tiger’s habitat is changing, prey is becoming scarce and he is losing weight and energy. Ireland is burdened with debt and, like Greece, recently had its credit rating down-graded by Standard and Poor from AAA to AA+. Our economy has contracted between 2008 and 2010 by 17% and unemployment had ballooned to 13%, putting additional strain on government expenses as welfare services are expanded to accommodate the newly unemployed.
While Greece balances precariously on the edge of bankruptcy, countries like Ireland, Spain and Portugal are slipping closer to the edge. The EU has repeatedly called upon at-risk countries in the EU to enact spending cuts to reduce budget deficits that may cripple the European economy and while Ireland has not yet made any significant moves to reduce spending, the Economic and Social Research Institute have, according to reports by Ireland news media, said that the economy will not show any signs of recovery from the recession until 2011, by which point the public debt may be above 80% of GDP.
“Ireland will be one of the countries in focus. We are expecting fiscal consolidation,” warned EU Economics Commissioner Olli Rehn.
In May the government was forced to sell 1.5 billion Euros in bonds and while this raises badly needed revenue now, the government will face a backlash in 2014 and 2020 when the bonds mature.
But, is the severity of the economic outlook merely a sign of the times? Countries the world over have been effected by the recession, there are few national governments without a deficit and Ireland’s government spending is not all that greater than other developed countries. Is the crisis because of the country’s unsustainable living or because of the greatest recession since the Great Depression?
That’s a matter of opinion, but recent events have shown that Pfizer, one of the biggest employers and longest standing foreign companies operating in Ireland, does not believe the current model to be sustainable, even if there weren’t a devastating recession gripping the world.
Paul Duffy, the head of Pfizer’s operations in Ireland told Ireland news media that operations in Ireland had become too costly due to extensive employee benefits, regulations and labour laws and said the cost had gotten “out of whack” and “out of hand” – a possible impediment to recovery from the recession. When Ireland was the land of milk and honey and our economy was expanding rapidly, the cost of doing business here was proportionate to that growth, but a 17% retraction and no prospect of growth until 2011 changes this considerably.
Duffy was speaking in relation to a decision by Pfizer to lay off 785 of its 5000 employees in Ireland. Ireland news media reported the company as saying the decision had nothing to do with the global economy or the financial situation of Ireland, but instead was related to a recent acquisition of another pharmaceutical company that created dual plants and factories, rendering their activities inefficient.
Globally, the company is releasing around 18% of its workforce, which puts the layoffs in Ireland at a level slightly less than what might have been expected. Although the layoffs were unrelated to the economy, Duffy made his statement with regard to Pfizer’s future role in the country, warning that Ireland could not continue to be the most expensive environment in which it operates.
Pfizer may be representative of the feelings felt by many other domestic and international companies. If it is the most expensive operating environment for Pfizer, the same is probably true for other multinationals. The current downturn and ensuing recession will have psychological effects that will last much longer than the financial ones, as the economy picks up again companies will remain conscious of costs and confidence in Ireland will hinge on its ability to adapt to more austere Europe.
Comments
More Ireland News
RSS-
Second arrest over attempt blow up Northern Ireland policeman and family
Northern Ireland Police appear to be close to solving a case involving the attempted bombing of a police officer and his family 6 months ago. Last December the senior office, his wife and children were about to take a drive from their home in east Belfast and go on a family picnic when the policeman noticed a booby trap apparatus fixed to the bottom of his car. The booby trap was linked to a ...
-
Michelle's hair a hit in Northern Ireland
Michelle Obama, who headed to Belfast for this year's G8 summit, is facing backlash on Twitter for her fringes. Onlookers apparently were more concerned with the ill-received styling of her bangs than her speech, the Huffington Post reported. The first lady seems to be growing out her blunt trim and transitioning it to a side-swept ...
-
Group of Eight leaders stop short of calling for Assad ouster
ENNISKILLEN - The Group of Eight industrialised nations called for a swift end to the bloody civil war in Syria and urgent peace talks but stopped short of calling for the ouster of Syrian President Bashar Al-Assad in its joint statement at the end of talks Tuesday. Despite the lack of consensus among the G8 on the fate of Assad, as well as the use of chemical weapons by his regime, Canadian ...
-
Rise in transportation costs push up UK inflation to 2.7pc
LONDON - The consumer price index (CPI) inflation increased to 2.7% in May, up from 2.4% in April, mainly due to higher fuel costs pushing up transportation costs particularly airfares, the Office for National Statistics (ONS) said Tuesday. The ONS said the rise was due to a record increase in airfares and higher fuel prices. "The inflation rate has returned to the levels seen between ...
-
US first lady daughters tour Irish park
US first lady Michelle Obama and daughters Malia and Sasha Tuesday wrapped up their brief visit to Ireland with a private guided tour of Wicklow Mountains National Park. Michelle Obama and the girls have been taking in the sights here as President Barack Obama meets with other world leaders at the G8 summit in neighbouring Northern Ireland. Malia, 14, and Sasha, 12, listened attentively ...
-
G8 leaders focus on taxation counter-terrorism at final day of summit
Beijing, June 18 (Xinhua-ANI): Leaders of the Group of Eight (G8) nations gathered in Lough Erne, Northern Ireland on Tuesday for the second and final day of their summit. Key items on the agenda are taxation, transparency and counterterrorism. The issue of Syria was discussed on Monday evening at a meeting between Russian President Vladimir Putin and U.S. President Barack Obama and also at a ...
-
Sentences for homicide too lenient families of victims say
found just over 90 per cent of victims' families believed sentences were lenient or excessively lenient and more than 60 per cent said set tariffs should be introduced for ...
-
Australian killer of Irish woman jailed for life
MELBOURNE (AFP) - A serial sex offender was on Wednesday sentenced to life for the "savage" rape and murder of an Irish woman in a Melbourne street, a random killing which shocked the nation and led to an outpouring of emotion.Adrian Ernest Bayley, who pleaded guilty, had a history of violence and was on parole at the time of the attack on Jill Meagher as she walked home alone after ...
-
Brumbies v British Irish Lions – video highlights
Video highlights of the Lions Lions falling to their first defeat of the tour against the ACT Brumbies at Suncorp Stadium, Canberra. This was the first victory by an Australian province over the Lions since ...
-
Ireland Nugents new legs get finishing touches
ORLANDO -- A lot of work went into making 2-year-old amputee Ireland Nugent's new legs. After days of fittings and measurements, prosthetists spend Tuesday put the finishing touches on the limbs, which are custom fit to size and style. What's a girl to do with so many fashion fabrics to choose from? Ireland didn't pick just one pattern, Minnie Mouse is on her right leg, Dora ...
-
Ireland Nugent home with new legs
Less than two blocks away, a prosthetic team at Prosthetic and Orthotic Associates worked feverishly, creating Ireland's new legs. Ireland chose hew very own patterns for the prosthetics, she wanted Dora for one leg and Minnie Mouse for the ...
-
Australian serial sex offender sentenced to life in prison for murdering Irish immigrant
MELBOURNE, Australia - A serial sex offender was sentenced to life in prison on Wednesday for a rape and murder that outraged Australia's second-largest city. The violent death of Irish immigrant Jill Meagher as she walked home from a bar on Sept. 22 last year shocked the city of Melbourne. A week later, 30,000 people took to the streets near the laneway where she was strangled to rally ...
-
Michelle Obama under fire for $5 million Ireland visit
Michelle Obama waves during a visit to Finnegans Pub in Dalkey, Ireland on June 18.(Photo:Agencies) U.S. First Lady Michelle Obama won't exactly be roughing it during her two-day trip to Ireland, reports the Washington Times. Mrs. Obama is staying at a $3,300-per-night hotel suite in Dublin's five-star Shelbourne hotel. She and her entourage have booked 30 rooms in the hotel. The ...
-
Jill Meagher killer to serve at least 35 years
The man who raped and murdered Irish woman Jill Meagher in Melbourne, Australia, last year, has been sentenced to life in prison. 41 year old Adrian Bayley has been sentenced to life for the murder and 15 years for what Justice Geoffrey Nettle said was "a savage violent rape of the worst kind." Justice Nettle of the Victorian Supreme Court said Bayley would have to serve at least 35 ...
-
Pat Cummins to play for Northern Ireland Academy
Northern Ireland Injury-plagued Australian fast bowler Pat Cummins will continue his recuperation playing for the Northern Ireland Cricket Academy in Belfast tonight.The 20-year-old will play against Marylebone Cricket Club (MCC) before switching sides two days later to play against Ireland under-19s, who are preparing for their under-19 World Cup qualifiers in the Netherlands in ...
-
State-run Donegal nursing home criticised by Hiqa
The report accuses the home of a "persistent failure" to ensure the right numbers and skill mix to care for residents, as required by previous ...
-
Taoiseach insists no country can act unilaterally on tax
Taoiseach Enda Kenny and International Monetary Fund managing director Christine Lagarde after a G8 summit group photograph at Lough Erne, Enniskillen, yesterday. Photograph: Reuters/Andrew ...
-
Midges make the most of Obamas at Glendalough
US first lady Michelle Obama and her two daughters Sasha and Malia fight off an unwelcome attack of midges at Glendalough. Photograph: Julien Behal/PA ...
-
Third Savita report not before end of summer
late summer or early autumn.Dr Nash proposed that the board endorse a vote of apology and condolence to Ms Halappanavar's husband, Praveen. Seconding the proposal, board ...
-
Mrs Obama and girls treated to Bono fish and chips and a pub lock-in
Michelle Obama's lunch with Bono in Finnegan's pub in Dalkey wasn't listed on the official itinerary but it was the worst-kept secret in town. By the time the singer arrived just before 1pm with his ...
-
Knowledge of history is intrinsic to citizenship says President
President Michael D Higgins said: 'Knowledge of history allows us to debunk myths and challenge inaccuracies as well as expose deliberate amnesia or invented versions of the past.' Phototograph: Peter ...
-
Kenny not concerned by G8 strategy on tax evasion by multinationals
Taoiseach Enda Kenny has pledged to support moves by world leaders to overhaul the rules of business taxation, an iniative designed to stamp out aggressive avoidance and evasion by multinationals. On the final day of their summit in Co Fermanagh, the Group of Eight leading industrial powers pledged assertive action to ensure big companies pay a fair share of tax on profits. The plan was ...
Ireland Digest
-
Is Ireland living beyond its means?
Ireland is highly developed and has experienced rapid and constant economic growth in the last few decades, with many calling the country the Celtic Tiger. But recent events in the world economy and the financial situation of Europe may mean changes are afoot for the Tiger.
Ireland is one of the most developed countries in the world and has a high tax high government service economic model, it has for the last few decades substantially reduced the socio-economic inequalities in the economy and had a Gini coefficient score of 30.1 in 2000 while The Economist says we have the best quality of life in the world. This has come at a cost though, government deficits are running at over 10% of GDP, public debt accounts for over 40% of all revenue generated in the economy and the Irish population has a debt level, in relation to disposable income, that is the highest in the developed world – our personal debt in 190% more than our disposable income. All this begs the question, are we living within our means or is Ireland’s economic model unsustainable? Read more
News from around our Network
