The calm before the storm

In January 1988 The Economist published a survey of the Republic of Ireland. The title read "poorest of the rich", a report which depicted a dark and dreary future for the Irish economy. Only a few years later, Morgan and Stanley conceived the term the "Celtic Tiger" which from then on would symbolise the glory days of the Irish economy. From 1988 to 2007 real GDP in Ireland increased by 6% per annum on average, with the figure reaching double digits on average during 1995 to 2000. Even more surprising, the unemployment rate which had been 16% in 1994 shrank to 4% by 2000 ( the lowest recorded unemployment rate in modern history). The area of employment in Ireland also experienced a significant shift away from agriculture with almost half the Irish labour force working in non-agricultural industries by 2007 portraying a new era for the Irish economy. 

Some ten years later The Economist pictured Ireland on the front cover with the title "Europe's shining light". By 2007, Ireland was at the frontier of economic prosperity. A rolling inflow of foreign direct investment driven by a low corporate tax rate (10-12.5% throughout the late 1990s), and an increase in EU aid to build infrastructure and improve education resulted in the level of income per head in Ireland exceeding the EU-15. The Irish standard of living increased dramatically over this period. Higher wages fuelled increased spending while low interest rates coupled with relaxed lending requirements gave people the opportunity to get a foot on the property ladder. Surely this was an economic miracle which other economies should aim to emulate.