The death of a tiger?

As the financial crisis tightens its grip on the world and questions are raised about the strength of the Asian economies, a lone tiger in Europe has avoided most of the limelight. The republic of Ireland dubbed the “Celtic tiger” based on its high growth rates. From 1990 to 2001 and again from 2003 to 2007 after a small slow down to return again to the top of the European growth table.

The credit crunch has brought an end to this while economists previously believed that a soft landing was possible it is clear now that has not happened. Ireland was the first of the euro zone economies to fall into recession (two consecutive negative quarters of growth) in September 2008.This was heralded by the collapse of the large property bubble bursting in a similar way to Spain. It is now predicted that house prices could fall from peak to trough by 80% in real terms according to Morgan Kelly an economist form UCD (university college Dublin).The economy is now in dire difficulties due to fiscally irresponsible policies by Charlie McCreevy who led to a near 50% rise in public spending while at the same time cutting the rate of income tax. Now with the collapse of tax revenue the government under Brian Cowen may be facing budget deficit of near 7% of GDP this year.

Any recovery is going to be difficult Irish commentator Fintan O’toole says Ireland “doesn't have a good health service, an end to child poverty, a world-class infrastructure or even an acceptable system of primary education. Nor does it include the much-touted "innovation society" or "knowledge economy". Only time will tell whether the Celtic tiger will be seen again and while I have hope for the recovery of the Irish economy probably for mid 2010 I fear that the Celtic tiger is very much an extinct creature and Ireland has seen the last of its greatest age of prosperity and hard times are ahead.