“Young people have been the hardest hit by Fianna Fáil’s mismanagement of the economy. Fine Gael is offering them an alternative“ says Fine Gael leader Enda Kenny TD in 2009. Flickr/ EPP. Some rights reserved. In 2008, Ireland became the first Eurozone member to enter recession. Between 2007 and 2010 the economy contracted with a peak-to-trough decline of 12.4% of GDP, and tax receipts fell by 33%. The crisis was precipitated by the bursting of a property bubble, the collapse of the construction industry in which 1 in 9 people were employed, and a liquidity crisis in the country’s banks.
In the face of crisis
In what would become the most expensive bank rescue since the Great Depression, in autumn 2008 the state moved to guarantee the liabilities of the six biggest financial institutions. The guarantee cost the taxpayer €64 billion, or 37.3% of GDP, the highest proportion of any EU country, even ahead of Greece which spent 24.8% of GDP on its banks.
The public finances never fully recovered, and financial markets failed to regain confidence in the Irish government’s ability to service its debts. The country was driven to the brink of bankruptcy, and in November 2010, it became the second Eurozone member after Greece to seek a bailout from the Troika, agreeing to the terms of a four-year €67.5 billion rescue package.
