Ireland will become the first bailed-out European country to officially conclude its financial rescue program this weekend, but the hardship brought about by the massive spending cuts imposed by the European authorities that lent Ireland that money will take years to fade.
The $92.9 billion loan package came with austerity requirements that forced the Irish government to cut about $41.2 billion in spending — an amount equal to about one-fifth of the country’s entire annual economic output, the New York Times notes. “New taxes were introduced. Salaries for public employees were cut by around 20 percent, and reductions in unemployment and welfare benefits followed,” the author writes, in a program that amounted to nearly $14,000 in cuts per person nationwide. Another $3.4 billion in austerity measures are on tap for 2014 in order to keep the financial markets happy enough to keep buying Ireland’s debt without bailout assistance.
After all of that, unemployment is still at 12.8 percent for the whole country and 28 percent for young people. The vast majority of the unemployed have been out of work for more than a year. Homelessness has spiked by 20 percent since 2010. One study found that two-thirds of Ireland’s families can’t pay their bills or buy the basic necessities of life. Small business loans are defaulting at a very high rate. Children are more likely to live in a household where neither parent works in Ireland than anywhere else in Europe. More than 18 percent of all homeowners in the country have missed a mortgage payment in 2013.
Economic pain from austerity has become the norm in much of Europe. Unemployment has remained at record highs for months across the 17-member Euro currency zone and is projected to remain at or near record levels throughout 2014. An economist at the European Commission, one of the major governing bodies in charge of issuing bailouts, recently published research demonstrating that the Commission’s austerity programs have exacerbated economic hardship to a far greater degree than the group previously thought. That work reflects the broad consensus among economists that austerity does more harm than good.
The crisis that left the Irish banking industry in need of a bailout has connections to other conservative economic ideas as well. The country earned praise from American conservatives for adopting supply side economic policies, primarily massive tax cuts. For years, Ireland grew very rapidly and conservatives held up the so-called “Celtic Tiger” as proof that their ideas work. But Ireland’s growth proved to be a mirage rather than a durable system — the country had made itself a corporate tax haven without building a sustainable system for core economic growth and employment — and the country went bankrupt in 2010. The ensuing bailout is coming to a technical end this weekend, but austerity will continue to cast long shadows over the average Irish person’s economic wellbeing for years to come.