Lifestyle

The Ode: The Celtic Tiger (1994 – 2010)

Ireland's low taxes and cheap labour spurred an economic boom and a wave of national pride, but the recession killed Europe's fattest cat.

The Celtic Tiger was born in August 1994, when British economist Kevin Gardiner coined the term to describe Ireland’s unexpected economic explosion. After decades of political unrest, recession and high unemployment, Ireland was the fastest-growing economy in the European Economic Community (the precursor to the EU), with annual growth of more than 5%. Comparing the boom to that of the Asian Tigers, which included China and Taiwan, Gardiner penned a paper on Ireland for investment firm Morgan Stanley, entitled The Irish Economy: A Celtic Tiger. Ireland’s success led to other spinoff brands, including the Northern Tiger (Canada) and the Balkan Tiger (Romania and Bulgaria).

The economic takeoff was a dramatic departure for Ireland, which was once the poorest country in the European Economic Community. “Cruelly written off for years by the investment community as a wind-swept peat bog, populated only by terrorists and Guinness-addled farmers,” opined The Guardian in 1995, “Ireland is suddenly making investors take notice.” Attracted by a combination of low corporate taxes and inexpensive labour, big multinationals like Dell and Intel set up shop on the Emerald Isle. As peace talks progressed in Northern Ireland (a deal was reached in 1998), the long-divided country launched the first pan-Irish investment trust.

Disposable incomes increased, and education and infrastructure improved. There was excitement on the streets — what one analyst dubbed “a feel-good factor.” Blossoming opportunities at home reversed a long-established trend of emigration. For the first time in 200 years, the prospects in Ireland were attracting workers rather than driving them away. Half of the 44,000 people who immigrated to Ireland in 1998 were Irish nationals returning home. Meanwhile, a baby boom contributed to the biggest population increase since the late 1970s. A cultural resurgence — led by bands like U2 and the Cranberries — was also underway. Michael Flatley, the “Lord of the Dance,” even called a show Celtic Tiger.

As the new millennium approached, Ireland’s fortunes continued to improve. Average annual wages ranked among the highest in Europe. In 1999, a 120-metre steel spire was commissioned on Dublin’s historic O’Connell Street — a symbol of the country’s success. That year, the Economic and Social Research Institute said growth would continue through to 2010, barring policy mistakes or outside factors. “We can repay the national debt [and] have significantly higher living standards with substantial cuts in taxation in the long term,” co-author John FitzGerald predicted. Though Ireland’s growth eased when the global economy slowed in 2001, by 2004, the IT sector had rebounded. Annual growth ballooned to 4% — signalling the beginning of what economists called Celtic Tiger II. But by then, Ireland was battling a host of social problems, including growing inequality and anti-refugee sentiment. There were also concerns about the rapid increase in property values and the stability of the construction boom.

The fear was warranted. When the 2008 financial crisis hit, the Irish-owned banks, which were heavily involved in property lending, went into free fall. In 2009, state-sponsored bank bailouts led to widespread panic; despite deep budget cuts, Ireland plunged into the deepest recession of any EU country. By June 2010, unemployment, which had sunk to 4% in 2001, reached 14%. Once again, emigration became the norm.

In November, any hope for a swift recovery was extinguished. Hobbled by its banks, Ireland accepted a $115-billion bailout package, marking the end of its hard-fought independence — and the slaying of the Celtic Tiger.