Government of Ireland

Ireland: Confident of a return to force

A floor has now been placed under the banking crisis, albeit at a very high cost to the public purse.

The bursting of the property bubble has had substantial implications for the Irish economy. Living standards have fallen back to 2004 levels, while transitory tax revenues–which had been used to finance increases in public expenditure–effectively dried up. In addition, Ireland has had to cope with the collapse of our domestic banking system, resulting in exposure to very large losses.

Notwithstanding the fact that Ireland has been tackling the impacts of the changed budgetary situation since mid-2008, market sentiment towards Ireland deteriorated in the autumn of 2010, on foot of rising public debt amid large annual deficits and public support for the banking system. Access to markets was effectively closed, necessitating financial support from our EU partners and the International Monetary Fund.

A new government took office in March of this year with a very strong mandate from the Irish people. The government is committed to reducing the fiscal deficit below 3% of GDP by 2015, in line with our European requirements. Moreover, we envisage running primary surpluses from 2014 onwards, helping to ensure that public debt moves onto a declining path by the mid-part of this decade.

The government is also committed to implementing additional structural reforms to boost the productive capacity of the economy, enhance labour market prospects and further ensure that the public finances and our overall debt burden remain on a sustainable path.

Through its policy measures, such as its Jobs Initiative, the government is implementing various reforms to address the deterioration in the labour market; crucially, this will be achieved in a fiscally neutral manner, and will help boost confidence and reduce precautionary savings.

A key focus of government policy is repairing the banking sector so that it is in a position to provide the credit necessary to support recovery. In broad terms, the approach is to recapitalise, restructure and deleverage viable institutions, and to facilitate the orderly winding down of unviable institutions. The recent Prudential Capital and Liquidity Assessment Reviews conducted by the Central Bank of Ireland have been well received by market participants, and there is a consensus that a floor has now been placed under the banking crisis, albeit at a very high cost to the public purse.

The recent macroeconomic data flow has been relatively encouraging, and GDP is expected to expand once again this year–the first time since 2007. While further fiscal consolidation and private sector balance-sheet repair will continue to restrain domestic demand, the exporting sectors continue to perform very well. This rebalancing reflects the significant improvements in cost competitiveness evident in recent years. This has resulted in the current account of the balance of payments moving into surplus, which is a key positive indicator in terms of overall medium-term prospects for the Irish economy.

The external funding programme has provided us with the breathing space to implement appropriate financial, fiscal and structural policies. The recent quarterly review concluded that policy implementation has been strong and that the targets have been met. As our policies pay dividends in the months and years ahead, we are confi dent of a return to market-based funding for both the sovereign and the banking sector by the end of the programme period in 2013.


OECD (2009), Economic Surveys: Ireland (next survey due late 2011)

OECD (2010), Better Regulation in Europe: Ireland

OECD (2010), Environmental Performance Review: Ireland 2010


For the views of other finance ministers from the OECD and partner countries on the economic challenges in 2011, see page 16 and our finance ministers’ roundtable in the inaugural edition of the OECD Yearbook 2011, now available online at

©OECD Observer No 284, Q1 2011

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.4% Nov 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.6% Nov 2017
Last update: 16 Jan 2018


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018