Irish Economy Resuming a Healthy Rate of Economic Growth

Subject: Economics
Pages: 2
Words: 390
Reading time:
2 min

According to BBC news, the IMF required the Irish government to come up with “austerity measures” aiming at reducing the Ireland output by 11%, in which the country’s budget would be 3% down. The international monetary fund (IMF) also required that Ireland should reduce the benefits of the unemployed and cut down on its minimum wage to rhyme with the wage levels of the European countries.

Prime Minister Brian Cowen is said to negotiate a bailout package with the IMF, which would be worth 85 billion euros, which he considered an overdraft. According to Robert Peston, a BBC news business editor, “35 billion euros would be used to prop up the banks, with 50 billion euros filling the state funding gap.” The measures taken up by the Irish government included property taxes, reduction in minimum wages, charges in domestic water, and the reduction of social welfare.

BBC further explains that workers who were not obliged to pay taxes would be required to do so as the government reduces civil service jobs by about 20,000. This also affects the homeowner, who will be expected to pay about 300 euros in the coming years. However, due to the IMF’s required measures for the rescue package, one being the reduction of the welfare state’s benefits, which has mainly enabled the country to attract immigrants who highly depend on these benefits other than employment. Therefore, many of these immigrants will be affected, as they prefer not working for a long time because of the guaranteed befits from the welfare. Hence, with the reduction in the benefits, these people will be forced to look for employment, thus enabling them to pay taxes.

It is therefore evident that the reduction of these welfare payments cannot reduce the economy’s crisis at the moment. However, the longer these welfares exist, the risk of the high rate of unemployment and increased inflation would be evident in the long run, and this would be a disaster to the Republic of Ireland. Nevertheless, the suggested wage and welfare cuts are realistic at this particular time when the republic is in crisis since it will reduce government spending while focusing on recovery and growth may be in the next four years as proposed by the International monetary fund.