Evaluations
Date: 07 oct 2016
Period: 2007-2013
Theme: Evaluation, Structural Funds management and Governance
Languages: en
The effect of the financial crisis on the Irish economy was dramatic, GDP growth which averaged over 5% a year over the 2000-2007 turning into a decline of 4% a year in the two years 2007-2009. Although growth resumed in the following years, it was relatively slow up until 2014, when GDP began to grow again at rates similar to those in the pre-crisis period. The recession had a marked effect on employment, the proportion of working-age population in work falling by 10 percentage points between 2007 and 2011 and unemployment climbing from under 5% of the labour force to almost 15%. Though employment began to increase after 2011, the employment rate in 2015 was still 5 percentage points less than in 2007 and the unemployment rate still over 9%.
The impact of the recession on public finances was also substantial. The budget which was close to balance in 2007 was pushed into large deficit. This amounted to almost 14% of GDP in 2009, which together with the substantial support needed to prevent domestic banks from failing, led the Government to request financial assistance from the International Monetary Fund, the European Commission and the European Central Bank. A period of severe fiscal consolidation measures were required in return and the budget deficit was reduced to 2% of GDP by 2015. Although public sector debt was reduced at the same time, it was still around 90% of GDP at the end of the period. Public investment was cut back severely as part of the consolidation measures, being reduced from almost 5% of GDP in 2007 to under 2% in 2013 (as well as in 2015).
There is a pronounced disparity between the Southern and Eastern region, where Dublin is situated, and the Border, Midland and Western one, which is more rural. Although both regions were hit strongly by the financial crisis, the Border, Midlands and Western region has been slightly slower to recover.