In early 2007, the Irish economy appeared to be doing well. There had been two decades of strong economic growth. Government debt was a mere €37.6 bn. At 19.5% of GDP this was one of the lowest rates of public-sector debt in the EU. Unemployment and inflation were also low. In 2006, George Osborne (now UK chancellor of the exchequer) wrote an article in The Times praising the ‘Irish economic miracle’. In many respects the statistics backed this up.
Yet, within just 2 years, the Irish economy went from boom to an extraordinary bust. The government had to rescue Irish banks from bankruptcy and this sent government debt soaring, with a record budget deficit of 35% of GDP in 2010. The economy also went into recession, unemployment rose and markets began fearing the Irish government would default on its debt. In 2010, the Irish government needed its own bailout from the IMF and EU.
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