ABSTRACT
Ireland has been regarded as the most successful peripheral country required to implement austerity policies since the onset of the financial crisis in 2008. This is illustrated by Ireland’s ability to exit the International Monetary Fund (IMF)/ European Union (EU) bailout programme in December 2013, which is regarded as a European success story as well as an Irish one. This chapter explores the features that have impacted on the sovereign debt crisis in Ireland and how this in turn has affected EU-Ireland relations. The Irish case is symptomatic of several interrelated crises – property market, banking, fiscal, financial, economic, social and reputational (NESC, 2009; Donovan and Murphy, 2013; O’Riain, 2014). The crisis was initiated by the collapse of the property market, which precipitated a banking crisis and a fiscal crisis. A fateful decision in September 2008 to guarantee all the private liabilities of the banking sector led to Irish taxpayers assuming a significant burden for the activities of domestic and foreign banks. In parallel government revenue collapsed and the budget moved promptly from surplus to a massive deficit. This culminated in the financial crisis leading to the bailout application to the EU/IMF in November 2010. Under the EU/IMF Programme, Ireland adhered to a series of targeted measures advocating banking stabilisation, fiscal consolidation and structural reform. The discussion will explore how Ireland confronted these challenges and subsequently implemented the Troika’s programme while endeavouring to enhance its credibility and commitment to EU membership.
