October 25, 2020

After Bust in Ireland, Ordinary People Make Do With Less

“We were on the up and up,” Mr. Condra said.

The Condras are among hundreds of thousands of Irish who, over the past few years, finally started to catch up with and even surpass many of their European neighbors. But now, after a stunning plunge fueled by a disastrous banking collapse, the economy has fallen back to where it was in 2005, before a housing bubble stoked a growth frenzy.

“The last several years of growth in Ireland have effectively been wiped out,” said Constantin Gurdgiev, an economist and lecturer at Trinity College in Dublin.

Indeed, for many people in Ireland, it is as if the boom never happened. And some of those who floated up during the good times now see themselves slipping even further behind.

“It’s like we drew the lottery ticket made in hell,” said Mr. Condra, who says he gets by with only two pairs of shoes, one for work, so that he can afford to meet the needs of his growing children. “Suddenly we see that the Europe we’ve bought into isn’t a golden utopia.”

Benefiting from years of low interest rates that followed the creation of the euro zone in 1999, Ireland enjoyed one of the biggest growth spurts of any country in Europe, and spent lavishly as its wealth increased. The economy expanded an average of 7 percent in the decade leading up to 2007 before plunging into a deep recession. Per person, inflation-adjusted economic activity has fallen roughly 18 percent from the peak, when the average gross domestic product per person was a shade over €43,000, or about $62,000. Now it is less than €35,000.

Indeed, as the country tries to recover from the bust, many of its people are paying a tremendous cost for the folly of the country’s banks and to bring its government finances back in order.

As part of Ireland’s effort to pay down its immense debts and bail out the banks, the Condras’ salaries from their state jobs as hospital workers have been cut 20 percent in two years. Higher taxes and further spending cuts are on the horizon.

Moreover, the European Central Bank, for the first time in three years, is raising interest rates, which will increase borrowing costs on existing home loans. That frightens the Condras even more.

“Now we’re terrified that we won’t be able to pay our mortgage, and could move into social housing,” Mr. Condra said.

Even people with good incomes who have not been hit as hard as the Condras are convinced that Ireland is facing years, perhaps a full generation, of economic struggle.

With unemployment at 14.7 percent and expected to rise further, thousands of young Irish people continue to leave the country to find work. Those who have good, secure jobs here are thankful, but even they worry about the future and are rationing spending. Household savings surged to €11 billion in 2009 from €3.5 billion, and net disposable income fell.

To be sure, there are glimpses of renewal. Exports from multinationals like Intel, Pfizer and smaller manufacturers are surging as wages become more competitive and help to lower production costs, giving hope for future growth.

Signs of a real estate recovery have even emerged, with buyers flocking to recent auctions to snap up distressed properties.

Patsy Carney’s generic pharmaceuticals export business, EirGen Pharma, has been thriving. He has hung on to his 40 employees at his plant in Waterford and hopes to hire 60 more people someday.

Nonetheless, he recognizes what the collapse has meant for the Irish as a whole. “You see it all around you, all the people out of work, and there’s nothing turning up,” he said. “It’s frightening.”

Article source: http://www.nytimes.com/2011/05/07/business/global/07austerity.html?partner=rss&emc=rss