Opinion: a decade on, there is much to learn about how Ireland reacted to the financial crash and its aftermath

Ireland’s dramatic economic collapse in 2008 began with the infamous bank guarantee. It was initiated by then Minister for Finance Brian Lenihan against the backdrop of an imperilled domestic banking system and an immense international financial crisis that engulfed the US and UK.

Ireland went on to endure protracted bailout arrangements, the Troika terms, severe job losses, public sector pay retrenchment and renewed emigration. A decade later, the country continues its recovery, but what have we learned about ourselves and how have things changed?

From RTÉ Archives, David Murphy reports for RTÉ News on the introduction of the bank guarantee scheme by Minister for Finance Brian Lenihan on September 30th, 2008

Understanding the effects eludes a simple précis, but we can start with a basic comparison. The UK responded to the crisis by returning to its elites, vesting its confidence in Eton- and Oxbridge-educated politicians, before plunging into Brexit. The US took another course, with people tearing one another apart politically as their financial fortunes eroded.

In Ireland, different cultural resources came into play. A certain dose of fatalism, low expectations of politicians and memories of a country without money proved an unexpected resource. Ireland was the envy of Europe in its relatively compliant reaction to austerity. Admittedly facing even greater challenges, Greece saw violence on the streets. By these standards, Ireland has shown an intriguing cultural resilience. Should we have been more outraged, more insistent on radical change?

From RTÉ One's Prime Time in November 2008, Morgan Kelly, Prof of Economics at UCD, and others discuss the banking crisis

Paradoxically, the great paroxysm came over water charges. These were rejected by popular protest and widespread non-compliance, sparked in part by a sense that enough was surely enough. The electorate also rejected a misguided attempt to address the problem of the Irish senate by abolishing it, but no further proposals have come forward for reforming the upper chamber. We seem incapable of large-scale readjustment, largely content with (or at least acquiescent in) who we are. Independents continue to enjoy a political heyday, even as their "genepool" suggests alignment with established political parties in many cases.

One thing we can be thankful for deserves remark: imagine what 2016 would have been like if the Celtic Tiger had continued unabated. The marking of the centenary of the Easter Rising would have taken place with unbearable triumphalism. Instead, critical self-reflection characterised much of this public commemoration, made possible in some measure by the chastening effects of economic disaster.

From RTÉ Radio One's Morning in 2014, an assessment of the mood after tens of thousands protest against water charges

An early, anguished response to the predicament saw the letters pages of The Irish Times filled with responses to the question "was it for this?" The query drew attention to the sacrifice of the rebels, intent on establishing Irish sovereignty, only to see it handed away to foreign officials representing the IMF and ECB. Much of that concern has disappeared, with the political focus remaining, on the one hand, on preserving Ireland’s corporate tax rate (and refusing the €13 billion owed by Apple), and on the other by contemplating the spectre of Brexit. The British remedy will not be Ireland’s, strong in its EU allegiance, just as the Icelandic option of burning bondholders was sidestepped.

Will all of this make us better prepared to avoid a repeat experience or more liable to slip into old errors and merely shrug when things going wrong? The heat in the housing market raises inevitable concerns about repeating a traumatic experience, but presumably it would take some doing to invent another Anglo-Irish Bank to fall in on itself.

Ireland was the envy of Europe in its relatively compliant reaction to austerity

We continue to pull in different directions. The default mode in government remains largely self-denial at the risk of ongoing underinvestment. At the same time, a decade of limited means has not led to a cultural abandonment of Celtic Tiger-era dreams of conspicuous consumption. We still want the same things, even if we can’t always have them.  

Back in 2008 when the financial crisis began, no-one under the age of 25 had much memory of a country without money. Ten years later, those under 25 have little recall of a country that was not living under austerity. The fate of a generation denied its full opportunity is unresolved.


The views expressed here are those of the author and do not represent or reflect the views of RTÉ