Ireland’s last austerity budget: the beginning of the end?
Anna Sonny, 18 October 2013
It looks like Ireland will be the first eurozone country to exit its bailout programme after Prime Minister Enda Kenny announced this week that the country was at the end of its economic emergency. The date set for the exit is December 15th, which is 3 years after the country requested a bailout from the EU, following the colossal collapse of the banks in 2008.
Ireland is hoping to leave the bailout programme without a precautionary credit line – that is, without additional financial aid from the EU’s rescue fund. Although this will mean the country will not be able to access the European Central Bank’s controversial Outright Monetary Transactions bond-buying programme, it will mean more financial independence, with less monitoring from EU officials and a chance for the country to claim restored economic sovereignty.
Since 2008, Irish governments have passed seven austerity budgets, taking 28 billion euros out of the Irish economy in spending cuts and tax hikes. Ireland’s finance minister Michael Noonan announced the country’s final austerity budget earlier this week. The budget aims to cut the deficit by a third, and contains a 2.5 billion euro package of spending cuts and tax rises, which is less than the 3.1 billion euro package that was originally agreed with the troika of the EU, the IMF and the European Central Bank in 2010.
If Ireland exits the bailout programme successfully, it will be hailed as a poster child for austerity, and perhaps provide some hope for Portugal, Spain and Greece. Ireland has met all the targets set by the troika since 2010, and the economy moved out of recession in the second quarter of 2013, with a growth rate of 2% expected for next year. Unemployment peaked at over 15% in 2012 but fell to 13.3% last month.