just wondering does anyone now we're a few years down the line have any idea of who recovered better from the crash Ireland or Iceland? I remember there was a lot of controversy at the time over which approach was better. The Irish "Banks are too big to fail" vs the Icelandic "Banks are too big to bail" approach? I've no knowledge on these matters but am very curious...
Ireland vs Iceland recovery
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Duke of Marmalade
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Iceland's GDP per capita has fallen from a peak of $69K to $47K today
Ireland's GDP per capita has fallen from $61K to $51K
So we seem to have fared better but that might be just Leprechaun economics
Ireland's GDP per capita has fallen from $61K to $51K
So we seem to have fared better but that might be just Leprechaun economics
I think that the reason this excellent question has not received much press coverage is because the answer is that Iceland and Ireland have achieved broadly similar results from very different policies.
I think the best measure to look at is GDP at purchasing power parity.
Iceland's peak to trough decline was 6.6% from 2008 to 2010. Followed by a subsequent recovery to 112% of the previous peak by 2015.
Ireland's peak to trough decline was 10.4% from 2007 to 2009. Followed by a subsequent recovery to 117% of the previous peak by 2015.
While we suffered more initially, I think we have laid a better base for future development of the economy, we may need it to face brexit.
All figures from the World Bank. http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=IS
I think the best measure to look at is GDP at purchasing power parity.
Iceland's peak to trough decline was 6.6% from 2008 to 2010. Followed by a subsequent recovery to 112% of the previous peak by 2015.
Ireland's peak to trough decline was 10.4% from 2007 to 2009. Followed by a subsequent recovery to 117% of the previous peak by 2015.
While we suffered more initially, I think we have laid a better base for future development of the economy, we may need it to face brexit.
All figures from the World Bank. http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=IS
Ceist Beag
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That's an excellent question OP and you would have to say, based on the figures provided above it certainly seems like our course of action was the better one long term. You still hear the arguments on both sides about whether we were right or wrong but certainly the facts provided here seem to point towards our choices being the better path to have gone down.
Those are fascinating graphs Leo. Show a much clearer picture of Irelands present position being far better than Iceland's.
When FF get back into power they will be able to borrow like its 2004 all over again. The guards and the teachers will have pay rises pushed down their throats then.
The borrowing limits imposed on us by the EU is what is saving us from ourselves. Monetary policy at the national level is gone...in the good ole days would could just print more money or adjust our currency, now we only have fiscal powers. I'm happier with this.
Gerry Canning
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It is well beyond my brain cells to figure out where we really where or where we really are, but would some of you smart people give me a simple (must be simple ) answer.
In 2008 we were banjaxed/ ruined/ insolvent / bust .
In my view things havn,t changed that much in 8 years.
In 2016 we arn,t banjaxed/are solvent/car sales are up/ house prices are up.
So , please answer this ; were we not banjaxed in 2008? or we are completely banjaxed in 2016 ?
In 2008 we were banjaxed/ ruined/ insolvent / bust .
In my view things havn,t changed that much in 8 years.
In 2016 we arn,t banjaxed/are solvent/car sales are up/ house prices are up.
So , please answer this ; were we not banjaxed in 2008? or we are completely banjaxed in 2016 ?
We are still banjaxed but we are used to it now and those who never had to deal with reality before have retreated into their protected world and decided that they don't like reality and someone else should just deal with it as long as its not them.
That's why the Anti reality alliance and people before logic are doing so well and the Public Sector Unions have their fangs in the neck of the rest of us while there's been no real change in our debt levels.
That's why the Anti reality alliance and people before logic are doing so well and the Public Sector Unions have their fangs in the neck of the rest of us while there's been no real change in our debt levels.
Simply as I understand it, and with some rounding of the figures.
In 2007 we were riding high. The state was collecting €47bn a year in tax and spending the same on public services. The national debt was 30% of GDP
By 2010 the state was collecting €31bn a year in tax and had a €60bn bill to bail out the banks. It continued to spend €50bn a year. We were definitely banjaxed.
To finance this it spent the pension reserve, €20bn, and borrowed the rest. National debt rose to 120% of GDP
Gradually through tax increases USC etc. and growth in the economy the tax take recovered to €45bn in 2015. We are still borrowing today, though less than before. National debt is down to 92% of GDP.
In 2007 we were in a bad place and heading down. Today we are in a very slightly better place but heading up.
To make an analogy, in 2007 we were like a worker on €47k a year who took a pay cut to €31k and was told that things were not looking good for keeping the job. He also had a small mortgage. So to maintain his standard of living and pay some unexpected bills (the bank bail out) he spent his savings, (the pension reserve) and drew down on his mortgage.
Today the wages have gone back up to €45k and we have stopped drawing down the mortgage, though the savings are gone and we are still increasing the overdraft. People tell us that the job is looking more secure than it was.
source for tax receipts figures http://databank.finance.gov.ie/FinDataBank.aspx?rep=TaxYrTrend
In 2007 we were riding high. The state was collecting €47bn a year in tax and spending the same on public services. The national debt was 30% of GDP
By 2010 the state was collecting €31bn a year in tax and had a €60bn bill to bail out the banks. It continued to spend €50bn a year. We were definitely banjaxed.
To finance this it spent the pension reserve, €20bn, and borrowed the rest. National debt rose to 120% of GDP
Gradually through tax increases USC etc. and growth in the economy the tax take recovered to €45bn in 2015. We are still borrowing today, though less than before. National debt is down to 92% of GDP.
In 2007 we were in a bad place and heading down. Today we are in a very slightly better place but heading up.
To make an analogy, in 2007 we were like a worker on €47k a year who took a pay cut to €31k and was told that things were not looking good for keeping the job. He also had a small mortgage. So to maintain his standard of living and pay some unexpected bills (the bank bail out) he spent his savings, (the pension reserve) and drew down on his mortgage.
Today the wages have gone back up to €45k and we have stopped drawing down the mortgage, though the savings are gone and we are still increasing the overdraft. People tell us that the job is looking more secure than it was.
source for tax receipts figures http://databank.finance.gov.ie/FinDataBank.aspx?rep=TaxYrTrend
Duke of Marmalade
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Good analogy cremeegg. But note that to be back at 2007 levels on a possibly more secure basis is an incredible place to be given the abyss we have passed over. 2007 was the height of Bertie's false boom, we were the envy of Europe, to be back there but possibly this time on a more solid basis is fantastic.