Ireland has been in serious financial trouble for more than five year. Unscrupulous or unknowing bankers, greedy real-estate developers ,and a no-regulation compliant government were the chief causes of the onset of the crisis. The Irish people responded dramatically and in the landmark election of March 2011 the previous ruling party, Fianna Fail, was destroyed at the polls with their long-time opponents, Fine Gael, taking power. The new government, finding itself deeply in debt to the European Union, most notably the German banks, set about to reduce the debt by instigating a regime of austerity.
Government salaries, including those of all the politicians and state workers, were cut; pensions were reduced; teachers’ salaries were cut; and social services were reduced nearly everywhere across the country. In addition, new-house construction came to a halt, and to this day unfinished and empty houses can be found all over Ireland.
Fortunately, the previous good years of the economy and the largesse of the European Union served Ireland well. Ireland’s infrastructure had been transformed into a modern country. As American visitors can testify, the new roads are superb. Travel time from Dublin to Belfast is now less than two hours on super highways. Travel throughout Ireland is far easier. On the other hand, arrogant high pricing decisions made by merchants, hotel owners, and golf course owners led to a sharp decline in tourism numbers, which have not yet returned to the levels of four years ago.
The Irish people have paid a huge price in terms of their lower salaries, pensions, and reduced social services. New car sales had virtually no growth, few were able to buy homes, and a sense of depression pervaded the country. Given such difficulties, the Irish deserve much praise for marching forward every day, handling the adversity largely without complaint. Today they can see a renewal and a promising future; Ireland has managed its way back from disaster.
With the cooperating sacrifice of its people and the fiscal leadership of its political leaders, much of the onerous debt to Europe has been paid down to more manageable limits and 2015 promises to be a far better year. In mid-October the Government, led by Fine Gael Minister of Finance Michael Noonan and Taoiseach Enda Kenny, presented the budget for 2015. It provides at least partial relief for many and changes the gloom and doom atmosphere of previous years.
The highest income tax rates will be reduced by 1 percent; child benefits will be increased; no new cuts to social welfare rates are planned; and welfare recipients can expect a 25 percent Christmas bonus in their December checks. And 1,700 new teachers and 200 new Guarda will be hired. With Ireland still operating under serious debt constraints, this spending necessarily has to be limited, but the announcement is a mood-changer, and that is very important.
In addition, Kenny has announced that he plans to reduce the tax rates again next year.
Of course, there is always dissent in a democracy. Some have said that more of the debt should be paid before any relief while the labor unions say the new spending is not enough. For all that, it appears that a good balance has been achieved and Ireland has received the congratulations of many countries for its achievements. In fact, Bankers magazine has named Michael Noonan as the best finance minister in Europe.
Meanwhile, there are ominous signs of increasing discord coming from the North. The Irish government in Dublin must always pay attention to Belfast since nearly half of its people consider themselves Irish first. The First Minister of Northern Ireland and head of the Democratic Unionist Party, Peter Robinson, has stopped cooperating with the Nationalists, refusing even to participate in meetings. It is a troublesome game they are playing.