During the late 80s, the Irish economy enjoyed a boost from the European Central Bank’s artificially low interest rates. A low tax rate was the lure for multinational corporations and back offices. But, a credit bubble burst and the economy went off the rails.
The Irish government embarked on a spending spree and began redistributing money to government workers. In fact, the government was so bold, it even went so far as to pay workers a bonus.
Despite the fact that the early 80s financial crisis was not the greatest recession to ever hit the island nation, it did result in a swell of a national economy. The aforementioned recession saw a high level of unemployment and an overinflated housing market, which led to a drop in consumption. It also caused banks to be wary of making loans for fear of losing their customers.
The big question is: did the Irish get the short end of the stick? Although a lot of blame is being placed on Ireland’s lax fiscal policy, its economy still managed to grow during the 1980s. The country’s chief exports were butter and beef. And, while the country may have suffered from the recession, Ireland was able to enjoy a resurgence in the economy thanks to artificially low interest rates and the lure of low taxation.
The late 80s financial crisis may not have been the best time to be an Irish resident, but it was still a good time to be a financial services savant. The Irish economy got a boost from the European Central Bank’s low interest rates and the government went on a spending spree.