ABACKDROPTOIRISHECONOMIC

ANDSOCIALDEVELOPMENT

DrDavidBegg

SCOPEOFTHEPRESENTATION

• Ireland’srecenteconomichistory

• TheIrishcaseinacomparativecontext

• Ireland,BrexitandEurope–contemporarychallenges

1988

THEIMFCOMESTOTOWN

IrishEconomicGrowth,1989-2009

Source:Fitzgerald&Kearney(2013:5)ESRI

IRELANDANDTHE2008FINANCIALCRISIS

• Irelandhadaplainvanillapropertyandbankingcrisis

• ‘SoftLanding’hypothesisblownawaybyLehman’scrash

• Irelanddidnothaveacrisisofitspublicfinances…debt/GDPRatio=25%

• Taxbasetoodependentonproperty=13%

BankingCrisis

ECONOMICRECOVERY

ThepositionoftheIrisheconomyinSpring2017assummarisedbyESRI:

• GDPgrowthforecastat3.8%in2017and3.6%in2018

• Growthwillbedrivenbyconsumptionandinvestment

• Unemploymentcontinuestofallandisforecasttoreach5.6%byend2018.

SOCIALPOLICYISSUES

• Significantdeficitsinhealthcareandhousingprovisionarisingfromausterity

• Demographicchangewillimpact(butlessthaninotherEUcountries)

• Unaddressedissuesofchildcareandpensions

• Needforlargescalecapitalinvestmentininfrastructure

IRELANDISCHANGING

• InfluenceofCatholicChurchhaswaned

• Referendumonabortionin2018

• Gaymarriagenowlegalfollowingreferendumin2016

• Irelandhasjustelecteda38yearoldgaymanwhoisasecondgenerationimmigrantasPrimeMinister

EXISTENTIALCHALLENGES

• HighlevelofuncertaintysurroundingBrexitandUSprotectionistpolicies

• Asmallopeneconomyparticularlyreliantoninternationaltradeishighlyvulnerabletosignificantchangesininternationaltradingconditions.

IRELANDASANOUTLIERINEUROPE

• Mostgeographicallyisolated.

• Foreignpolicybasedon‘Multi-interfacePeripheralEconomy’concept.(Ruane,2010).

• EconomycyclesoutofphasewiththerestofEurope(Smith,2005).

• Aliberalmarketeconomywithcountertendencies(O’Riain,2004).

• Neitherapureconsensusnoramajoritarianpoliticalsystem(Lijphart,1999).

• LimitedpoliticalinterestinEuropeanintegration.

BREXITANDITSDANGERS

• TheimpactofahardBrexitontradewithBritain(estimatedat3-4%ofGDPover10years

• Impactonthecommontravelareaandsinglelabourmarket

• Concernre.NorthernIreland:

- Fragilityofthepeacesettlement

- Possibilityofa‘Frictionless’landborderbetweenEUandBritain?

- ThecontinuedviabilityofIreland’smulti-interfaceperiphery(MIP)developmentmodel?

THEAGEOFRADICALUNCERTAINTY

“Thefinancialcrisisturnedwhatoutwardlyseemedastablepoliticalandfinancialenvironmentintowhatmathematiciansandphysicistswouldcalla“dynamical”system.Themaincharacteristicofsuchsystemsisradicaluncertainty.Suchsystemsarenotnecessarilychaotic– thoughsomemaybe– buttheyarecertainlyunpredictable.Youcannotmodelthemwithafewequations.Thebestyoucandoistoidentifyspotsofinstabilityandstayawayfromthem,muddlethroughandkeepyoureyeswideopen”.

WolfgangMunchau – FT19/6/2017