History of The Republic of Ireland - The "Celtic Tiger" Era

The "Celtic Tiger" Era

The state had had a disappointing economic performance for much of its existence, but it became one of the fastest growing economies in the world by the 1990s, a phenomenon known as the Celtic Tiger. One factor in this was a policy of attracting foreign investment by offering very low taxes on profits ("corporations taxes", which were set at 12%) and by investing in education – offering a well educated work force at relatively low wages and access to the now-open European market. The second factor was getting public spending under control by a series of agreements, termed ‘social partnership’ with the trade unions – where gradual increases in pay were awarded in return for no industrial action. However it was not until the second half of the 1990s that figures for unemployment and emigration were reversed.

By the early 2000s, the Republic had become the second richest (in terms of GDP per capita, adjusted for purchasing power parity) member of the European Union, had moved from being a net recipient of EU funds to a net contributor, and from a position of net emigration to one of net imigration. In 2005, its per capita GDP (adjusted for purchasing power parity) became the second highest in the world (behind Switzerland) with 10 percent of the population born abroad. The population grew to an all-time high for the state of about 4.5 million.

By 2000 Ireland had a substantial budget surplus and the first decade of the new millennium also saw a significant expansion of public spending on infrastructure and social services. As against this, several state-run industries were also privatised – Eircom for instance. In 2002, Irish national debt was 32% of GNP and fell further until 2007.

The Celtic Tiger started in the mid 1990s and boomed until 2001, when it slowed down, only to pick up again in 2003. It slowed again in 2007 and in June 2008 the Irish Economic and Social Research Institute (ESRI) predicted that Ireland would go into recession briefly before growth would resume.

However, since 2001, the Irish economy had been heavily dependent of the property market and when this crashed in 2008, the country's economy was badly hit.