Kevin Gardiner of Barclays Wealth, who coined the phrase “Celtic Tiger” in 1994, says that Celts have a nasty habit of extrapolating both good and bad times for ever (as a Welshman, he dares to make such generalisations). Just as the Irish suffered a bad bout of irrational exuberance in the boom years, they have now been overcome by excessive pessimism. Or, as Ms Enright puts it, “Ireland is a series of stories it tells itself. None of them are true.”(The economist, 17 February 2011)
In my review of the Irish economy over the last five years and how the government can pursue economic recovery I believe that Kevin Gardiner point will be validated. The Irish economic growth from 1995-2001 led the Irish people to believe that they were doing everything right and that any negative commentators should be shunned as pessimistic fools. The last five years have seen the realisation of the reality of what many of our shunned economic pessimists were saying since early 2004.I aim to clearly illustrate where things went wrong and how our economic failings were masked by an oversupply of cheap money and low taxes. I will also attempt to clearly point out the elephant in the room which I cannot see our politicians willing to tackle. In my opinion Ireland economic meltdown could possibly be the best thing that has happened in Ireland since the founding of the state once the correct measures are put in place.
Ireland’s economy was driven by foreign direct investment up until 2001 its three largest private sector employers were Intel, Dell and Hewlett Packard .In 2001 things began to change and the first signs of this can be clearly seen in Irelands export figures. Exports were increasing year on year until 2001 however in 2002 and on wards they began to fall. By 2006 the signs were everywhere and many of the Irish who lived in the UK through their boom and bust cycle of the late 80s were amazed that nobody was pointing out the obvious. Nearly all off Irelands well educated men and women appeared in their shiny suits singing off the same hymn sheet endorsing the lunatic practices that was driving the economy .The economic fundamentals that had powered Irelands growth in the 1990s had been eroded away .The low tax economy was still there however wages had now increased dramatically, Electricity was 46% more expensive than our nearest competitor the UK and Dublin was the 8th most expensive city in a survey of 71 global cities in 2008. Semi state monopolies were in a position to hold the country to ransom and the countries communication infrastructure had been sold off to the private sector leading to an another monopoly and poor internet broadband supply. In figure 1 we can see that prices rose by 20% between 1999 and 2005.
Source Euro Stat
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