Is Ireland's economic hangover really over?

Woman walks past street art in Dublin Every week, some 1,000 people leave Ireland to find work overseas

Related Stories

"There was a brashness and preoccupation with wealth that rested uncomfortably with the Irish psyche," says businessman and corporate turnaround expert Sir Gerry Robinson of his country's boom years.

The Donegal-born former chief executive of Granada TV and drinks giant Allied Domecq feels that the economic crisis from which Ireland now finds itself emerging might have been anticipated by many people.

"Some of the more fundamental things that mattered in life were being eroded," he says.

"We were driven by the quick buck.

"And now there's a sense that something was missing. I guess there's a kind of Catholic mentality - an understanding that they would have to pay for all this."

And pay for it the Irish certainly have.

Since the 2008 crisis, unemployment has risen to 15%, GDP has crashed by a fifth and debts have soared.

Sir Gerry Robinson Businessman Sir Gerry Robinson says Ireland's boom years saw a brash preoccupation with wealth

The Republic of Ireland is one of the most indebted countries in the developed world, with a quarter of mortgages at least three months' in arrears.

Start Quote

I'm on the same wage as I was seven years ago”

End Quote Mandy Freeman Theatre nurse

Mandy Freeman is a specialist theatre nurse in a major Dublin hospital. Her public sector take-home pay has been cut by a fifth but her huge mortgage has not and now she has to pay for her two daughters' university costs.

'It's been very difficult'

She describes herself as one of Ireland's new 'working poor'.

"I do feel I've been robbed of the years where I worked up the ladder and now I'm on the same wage as I was seven years ago," she says.

Ireland's GDP may now be rising and unemployment may be falling, as are government borrowing costs, but Mandy is one of many who say they have not yet felt the warm glow of this recovering economy.

"It's been very difficult for people on mortgages and young families, people in the education sphere and the health area," says the Irish prime minister, Taoiseach Enda Kenny.

That Ireland is growing at all is something of an economic miracle, and Mr Kenny himself describes what happened to the country in 2008 as "catastrophic".

Mandy Freeman Nurse Mandy Freeman says her wages have been cut by 20%
Low business taxes

Irish banks loaned billions of euros to anyone and everyone on the premise that property prices could only go up.

Start Quote

It is upsetting to feel that I have to leave the country and leave behind my own family”

End Quote Robert Byrne Student, University College Dublin

When the wholesale money markets folded, Ireland's economy collapsed.

Since then nearly €20bn (£16.7bn) of spending cuts and tax rises have been introduced and foreign investment has continued to flow inwards.

This is because Ireland was and remains one of the most open, business-friendly economies in the world - with a young well-educated workforce.

Foreign firms "find the supply of labour a good place to be - they find Dublin, Cork and Limerick good places for industry to be based," says Frances Ruane of the economic think tank ESRI.

Importantly, taxes on profits for all companies, domestic or global, stand at only 12.5%.

It has helped to attract the world's biggest names in technology - Facebook, Google, Twitter and AOL all have major operations around Dublin.

'It seems very strange'

And crucially for the nation's sense of sovereignty and self-belief, next month Ireland is set to exit the €85bn international bailout programme it entered three years ago.

Google's European headquarters in Dublin, Ireland Ireland's low tax rates have encouraged inward investment

But for most people who don't work in the tech sector, like Mandy Freeman, if they've kept their jobs they have had an economic migraine for the past five years - with big cuts in take-home pay.

Start Quote

Maybe there is a kind of inbuilt expectation that even when things are going quite well, it's not going to last”

End Quote Fintan O'Toole Irish Times

"We used to go to the cinema once a month as a family and try and go out for a meal, but they aren't really options any more. It's just too expensive," she says.

For many others, emigration has been the safety valve, which has kept Irish unemployment from reaching Spain's heady heights.

Whereas historically it was the uneducated who left, now 1,000 well-educated young people are taking their talents overseas every week.

Most are leaving because they cannot get the right kind of work in a feeble domestic economy.

Robert Byrne, aged 21, is a psychology undergraduate from University College Dublin (UCD), Ireland's largest university. He wants to work in a hospital but the crisis has seen the public sector shrink, so he is bound for Australia or New Zealand.

"It seems very strange because I grew up in an environment when everyone thought the Irish economy was the best thing ever.

"But unfortunately in the last five years we've seen that it was not sustainable.

"It is upsetting to feel that I have to actually leave the country and leave behind my own family," he says.

In a BBC-arranged debate among UCD students, well over half said they intended to emigrate. Yet asked if they were optimistic about their futures, 90% raised their hands.

'You respond by going'

Watch Joe Lynam's Newsnight film in full

Perhaps that is the dichotomy of the Irish psyche; resilient, optimistic, yet fatalistic in its world view.

"Maybe there is a kind of inbuilt expectation that even when things are going quite well, it's not going to last," says Fintan O'Toole, of the Irish Times.

"The Irish have never really had a huge amount of faith in their country, or the British empire which ruled them before that.

"So how do you respond to hard times? You respond by going, by getting out of the place and by trying to survive on an individual basis rather than by changing society itself."

One thing that could keep spirits up and emigration down is a thriving economy, and you get the sense that with a fair wind - economic resurgence in Britain and the eurozone - Ireland could be set to recover rapidly.

After a 15-year party and a five-year hangover, perhaps the Irish might not need as much aspirin in the coming years.

More on This Story

Related Stories

More Business stories


BBC Business Live

    TESCO PROFITS 09:46:

    Marks and Spencer's chief financial officer (CFO) Alan Stewart was announced as the new CFO of Tesco in July but he is still on gardening leave and is not due to join Tesco until December. Laurie McIlwee resigned as CFO in April but continued in post until just over a week ago. Over the last week there has been no CFO in the Tesco head office, the company has confirmed.

    TESCO PROFITS 09:39:

    Tesco says it has informed the financial regulator, the Financial Conduct Authority (FCA), about its investigation into the reporting of its profits.

    TESCO PROFITS Via Twitter Adam Parsons Business Correspondent

    tweets: "Tesco won't confirm my revelation that Chris Bush has stepped aside. But will confirm that Robin Terrell is now doing his job!"

    TESCO PROFITS 09:31:

    Tesco chairman Richard Broadbent says the retailer's investigation is focusing on the reporting of payments made to Tesco from its suppliers. It seems to be an issue of the timing of payments, rather than a "hole" in the accounts.

    TESCO PROFITS 09:18:

    Dave Lewis, Tesco chief executive, will not confirm that Chris Bush the managing director is one of the four executives suspended as part of its investigation into its profits reporting. He is speaking to journalists on a conference call.

    MARKET UPDATE 09:16:

    Aside from Tesco the FTSE 100 index is lower by 0.66% at 6,792 just over an hour into the trading day. Tesco is perhaps unsurprisingly the biggest faller. Meanwhile, engineering firm Petrofac is the biggest riser, up 1.72% to 1066p.

    TESCO SHARES 09:11:

    Tesco's share price is beginning to stabilise a little. Having fallen 11.3% on the open to 203.5p, Tesco shares are currently trading 7.99% lower at 211.25p

    TESCO PROFITS 09:01: BBC Radio 4

    James Bevan, chief investment officer at CCLA Investment Management, tells Today the profit warning from Tesco could amount to falsifying accounts. "They have decided to account for profits arising in future periods in the current period, and deferred costs that otherwise should have been recognised. That's really serious."

    TESCO PROFITS 08:57: Via Email

    Richard Hunter, head of equities at Hargreaves Lansdown, says Tesco's profit warning "does not come close to jeopardising overall profitability" at the supermarket, and the market will be happy that at least the bad news is out in the open and being dealt with.

    UK ECONOMY 08:44: BBC Breakfast
    Jeremy Cook

    Breakfast's Steph McGovern is down in London in the financial district talking to Jeremy Cook, chief economist at World First foreign exchange, who says we should be focusing on how strong the UK economy is following the Scottish referendum. Unemployment is down, GDP is growing - "all very very good news".

    TESCO PROFITS Via Twitter

    Sean Farrell on the Guardian's City Desk tweets: "Tesco CEO Lewis: 'This is not in the ordinary course of events. This has been audited by a big reputable firm.'

    TESCO PROFITS 08:35: Radio 5 live

    Four senior Tesco executives including the UK managing director Chris Bush have been suspended, while an investigation into profits reporting is carried out, Adam Parsons says on Radio 5 live. The share price has recovered a bit but is still down more than 9%.

    MINIMUM WAGE 08:21: Radio 5 live

    Shane Brennan from the Association of Convenience Stores says the minimum wage is becoming a "political football" between the main political parties, and warns a rise could hit employees negatively. "When the minimum wage goes up, small retailers cut back on the hours they offer staff," he tells Radio 5 live.

    CHILD BENEFIT 08:18: Radio 5 live

    Ed Balls is talking about the minimum wage on 5 live Breakfast, but he keeps falling off the air. He was half way through explaining how the Labour party wants to extend the child benefit cap - one of those "difficult decisions" necessary to "balance the books".

    TESCO SHARES 08:14:

    Tesco's shares opened down 11.3% at 203.5p - that's its lowest price since May 2003 - more than a decade ago.

    TESCO SHARES 08:09: Breaking News

    Tesco's share price falls by more than 10% in the first few minutes of trading in London.


    Menswear retailer Moss Bros has reported a pre-tax profit of £1.95m for the six months to July. That's slightly lower than their previous guidance and reflects the number of stores that were closed for refit in the first half of this year, the company said. Like for like sales were 6.4% higher.

    TESCO PROFITS Via Twitter Robert Peston Economics editor

    tweets: "Tesco! Oh my giddy aunt. Never thought it would come to this …

    ALIBABA 07:55:

    The Financial Times reports that Alibaba, the Chinese ecommerce group, has boosted the value of its IPO to $25bn (£15bn) by selling extra shares. That makes it the biggest IPO in history. Huge investor demand saw the company's share price surge 38% on its debut on the New York Stock Exchange on Friday.

    TESCO PROFITS Via Twitter

    Richard Hunter from stockbrokers Hargreaves Lansdown tweets: "Profit warning on a profit warning for #Tesco likely to put further pressure on a share price already down 39% over the last year"


    Other news from the stock market this morning: British bank Aldermore says it will float on the London Stock Exchange in October, aiming to raise £75m. Aldermore focuses on lending to small and medium-sized businesses and homeowners.

    TESCO PROFITS Via Twitter Adam Parsons Business Correspondent

    tweets: "Dave Lewis initiated inquiry over weekend. Am told Philip Clarke has officially left Tesco, but remains available to talk to investigation."

    PHONES 4U RESCUE 07:36:
    The Phones 4U shop sign.

    Phone network EE is to buy 58 Phones 4U stores - safeguarding 359 jobs - in a deal with administrator PricewaterhouseCoopers. The phone network was known to have entered negotiations over the weekend. On Friday Vodafone agreed to take over 140 Phones 4U shops.

    TESCO PROFITS Via Twitter Adam Parsons Business Correspondent

    tweets: "Tesco were due to report Interims next week. That has now been cancelled."

    LABOUR CONFERENCE 07:26: BBC Radio 4

    Labour shadow business secretary Chuka Umanna tells Today Labour is pro-business, but says: "What we have been clear about is we can't go back to business as usual and the kind of fast buck culture we saw in some parts of the economy that helped contribute to the 2008/09 crash."

    TESCO PROFITS Via Twitter

    City grandee David Buik tweets: "It never rains but it pours dear old Tesco. It appears profits have been over-stated by £250 mn - shares could be down 5% at the opening."

    TESCO PROFITS 07:15:
    A group of Tesco shopping trolleys

    "We have uncovered a serious issue and have responded accordingly," said Dave Lewis, who took over as the boss of Tesco last month. "The chairman and I have acted quickly to establish a comprehensive independent investigation. The board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear."

    TESCO PROFITS 07:11: Breaking News

    Tesco has released a statement saying it over-stated its expected profit for the six months to 23 August. In a trading statement on 29 August it said it expected half-year profits to be £1.1bn. It has now revised this down by £250m.

    LISTEN AGAIN Via Twitter Adam Parsons Business Correspondent

    tweets: The #WUTM podcast. All yours:…

    AIR FRANCE 07:03:
    Air France planes

    Pilots at Air France are looking ahead to a second week on strike this morning. France's transport minister Alain Vidalies says the fate of Air France is at stake in the dispute. Pilots are angry that the airline is expanding its budget carrier, which pays pilots less.

    LABOUR ANTI-BUSINESS? 06:55: BBC Radio 4

    Lord Jones tells Today that Labour has not given business the credit it deserves. "Without the wealth that business creates you have no public sector, you have no taxation, you don't have one job in the country. That's how important business is," he says.

    LABOUR ANTI-BUSINESS? 06:51: BBC Radio 4
    Digby Jones

    Lord Digby Jones, former head of the CBI and member of the last Labour government tells Today that Labour is casting doubt on its support for the UK business community. "Whatever the current shadow cabinet say - let's nationalise the banks, let's have a social market in energy, lets increase business taxes, whatever it may be - they are showing by their actions that they actually don't get it," he says.

    DEVOLUTION 06:42: Radio 5 live

    Wake Up to Money has been discussing the prospects for more devolution across the UK in the wake of the "No" vote in Scotland. Tony Travers from the London School of Economics says the UK is one of the most centralised democracies in the world - 95% of tax revenues go straight to the exchequer.

    MINIMUM WAGE 06:35: BBC Radio 4

    Is Labour leader Ed Miliband's pledge to raise the minimum wage to £8 per hour by 2020 anti-business?Simon Walker, head of the Institute of Directors, tells the Today programme he shares many of the Labour party's concerns - on energy prices, zero-hours contracts and wages. "But... we don't agree with Labour's instinct to legislate or regulate on these matters," he says.

    MARKETS 06:29: BBC Breakfast

    Breakfast's Steph McGovern is in the City in London before dawn this morning, talking to analysts and market traders about what's moving the markets after the "No" vote in Scotland last week. She'll be talking to a currency trader later to find out what's going to happen to the pound.

    MINIMUM WAGE 06:18:

    Labour's leader Ed Miliband says Labour will put the minimum wage up to £8 an hour if they win the election next year - up from the £6.50 is due to rise to this October. The unions say that's not enough, and want £10 an hour, while the CBI warns any rise will "put jobs at risk".

    Labour shadow  chancellor Ed Balls

    Ed Balls is expected to say that Labour will reinstate the 50 top rate of tax in his speech to the party conference later today. That's not necessarily news. But Labour haven't been completely clear on whether they would reinstate the 50p tax band until now. The inclusion of the proposal essentially amounts to an election promise eight months out from the general election.

    Phones 4U 06:02: Radio 5 live

    EE has confirmed it's looking into buy a few of those Phones 4 U shops now on the market. Judy Palmer from Begbies Traynor defends EE and Vodafone, the operators accused of helping to put the mobile retailer out of business, on Wake Up to Money calling their actions "commercial hardball".

    06:01: Edwin Lane Business reporter, BBC News

    Hello all. We're also getting the latest on the fate of Phones 4U, after it went into administration last week. Get in touch with us on or tweet us @BBCBusiness.

    0600: Matthew West Business Reporter

    Morning folks. We start the day with news that luxury shoe brand Jimmy Choo is looking at a stock market float in London, there are also half year results from Moss Bros. The Labour party conference goes into its second full day with a speech from shadow chancellor Ed Balls. It's his last conference speech before the election so we'll bring you any nuggets from that too. Stay with us.



BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.