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FOCUS - Numero speciale 26/2016 N. 0 - 30/12/2016

 The Impact of the Economic Crisis on the Irish Legal System. Between Austerity and Constitutional Rhetoric

The Irish economy enjoyed a long period of sustained growth from roughly 1994 onward, with a corresponding growth in wealth creation and employment. Yet, in 2008, Ireland recorded a substantial public deficit, which reached 14.3% of GDP in 2009, the highest in the EU, and experienced a rapid deterioration in its public finances, a collapse in the housing market and construction sector, and a liquidity crisis within the banking system. The rate of unemployment rose from just under 5% in January 2007 to more than 15% by January 2012 and unemployment in the construction sector rose by 60% in just four years from 2008 to 2012, all of which led to an unprecedented social crisis. The number of people relying on unemployment benefits rose to 326,000 in January 2009, the highest monthly level since records began in 1967. Given this context, in 2008, the Irish executive chose to guarantee the value of all personal deposits in Irish banks, before extending this to all debts accrued by national financial institutions. While these steps initially sated the market’s fears regarding the Irish economy’s stability, the fact that the liabilities of these institutions were more significant than the Government initially anticipated, meant that by 2010, the interest rates being charged on Irish Government bonds had risen to an unsustainable level. Hence, after publicly denying the existence of any plans for outside help, the Irish Minister for Finance and Governor of the Central Bank chose to accept a full EU financial “rescue package” (also known as “bailout” or support scheme) from the “Troika” of the European Commission, the European Central Bank, and the International Monetary Fund (IMF). Ireland’s support scheme amounted to €85 billion over four years from November of 2010 to December of 2013. The European Commission was proscribed the primary role of ensuring Ireland’s compliance with an eventual successful exit from the support scheme on behalf of the EU... (segue)


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