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Is Austerity Set to Return to Ireland?
The world is in the grip of a severe economic crisis. What the IMF now refers to as “The Great Lockdown” is leading to a global recession more severe than at any time since The Great Depression. While Ireland has so far avoided the worse of the tragic scenes that the pandemic has wrought upon some, it is clear that the country will not escape the economic fallout.
With businesses shuttering across the country, unemployment reached 16.5% last month as nearly 400,000 people applied for the new Covid-19 unemployment payment. At the same time, government revenues have fallen precipitously. But to prevent unmitigated economic disaster, the state must counteract the fall in economic activity in the private sector by continuing to increase expenditure. The result is a likely “€22 billion hole in the public finances”.
The last time Ireland endured a severe economic crisis, the country faced years of crushing austerity. As the Irish government undertook significant financial efforts to protect the financial sector, the cost was borne by ordinary people as vital public services were slashed and a raft of new taxes were introduced. Might a similar outcome follow from the current crisis? Is Ireland set for a return to austerity?
In many ways things are different this time. For one, this is a very unusual type of economic crisis. The…
