A speech by Ireland's prime minister, Enda Kenny, indicates that the country is emerging successfully from the economic blight that it has suffered since 2008.
Mr. Kenny, speaking at the annual conference of his party, Fine Gael, in Limerick Saturday announced that the nation of 4.6 million would exit in December from the International Monetary Fund and European Union multibillion-dollar bailout plan it has been operating under since November 2010. Ireland had been forced to request a rescue package when a real estate bubble in 2008 and subsequent economic and financial setbacks, including in its banking sector, had begun to result even in emigration, an age-old plague of the island. An estimated 250,000 jobs were lost in a short time, a catastrophic development for a country of that size.
Mr. Kenny, who became prime minister in 2011, introduced a drastic three-year National Recovery Plan, to run from 2011 to 2014, that included sharp reforms to government finance, including reductions in budget deficits by both cutting expenditures and raising taxes. Ireland's corporate tax, however, remained at 12.5 percent to attract foreign and domestic investment. In spite of considerable moaning by the Irish at the belt-tightening, the plan seems to have worked.
Job creation is at its highest level in five years. A budget surplus is anticipated for next year. Growth for 2013 is predicted at a modest 1.1 percent and is expected to rise to 2.2 percent in 2014. An exit from the international and EU bailout program will mean that Ireland's fiscal independence will have been restored in three years of austerity and careful management.
Ireland's performance is good news for the EU also. Its more economically successful countries, notably Germany, have been staggering for years under the financial weight of the woes of countries that have included, in addition to Ireland, Greece, Greek Cyprus, Portugal and Spain. The fact that Ireland has been able to take its medicine without choking its economy, and is now emerging into the clear light of day with a chance to reclaim the label of Celtic Tiger is encouraging.
Americans should not miss the fact that Ireland has pulled itself out of an economic tailspin through a judicious combination of budget cuts and tax increases that seem to be resulting in renewed prosperity. The United States might think of doing likewise.
First Published October 14, 2013 8:00 PM