Question

Ireland is one of Europe's most centralised countries. Discuss this statement in relation to economic and spatial policy in Ireland.
(1000 words+)

Answer 1

Ireland's financial prospects as a small open economy are increasingly dependent upon external commerce and driven by global markets. That means establishing relationships overseas is crucial and being part of the European Union helps Ireland to do just that in unity with other Member States.

EU membership has helped Ireland transition from economic depression in the middle of the last century to become a country with a prosperous free-trade, international investment and development economy.

The EMU includes the management of economic and fiscal policies by Member States and the implementation of a shared monetary policy so that the EU economy as a whole will flourish and remain healthy enough to survive financial shocks.

A strong, integrated economy ensures that individual Member States will take advantage of the greater scale and internal capacity of the EU and benefit from economic prosperity, improved opportunities for growth and more employment.

Some of the main aspects of the 2017 plan of the European Commission was the implementation of the Banking Union, which refers to countries within the Euro Area but can also be entered by other Member States.

The Banking Union has a single rulebook, and there are actually two components-the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM)-in place and fully functioning. The SSM is a new banking supervision system operated by the ECB and the participating Member States' national supervisory authorities. The key function is to find vulnerabilities in the banking system and ensure that action is taken to prevent issues from being threats to financial stability as a whole.

The 2019 European Economic Outlook for the autumn of the European Commission forecasts that Ireland's GDP will rise by 5.6 per cent per year. It is the fastest in the EU in 2019 which corresponds to an EU average growth rate of 1.4 percent for 2019 which 2020 and 2021 forecasted.

With rising infrastructure limitations and projected reduction in government spending, GDP growth in Ireland is forecast to reduce to 3.5 per cent in 2020 and to 3.2 per cent in 2021. The forecast says GDP growth is likely to slow in a worsening external climate, although it is predicted that underlying economic activity will remain strong, powered by household demand and construction spending.

Europe has now undergone a sovereign financial recession, and banks have slashed their lending to firms and private families, contributing to unemployment and poverty. In Ireland, the national debt was compounded by the State's unconditional bank guarantee to ease concerns of withdrawals and default from mass deposits.

The Irish Economy, meanwhile, had become heavily dependent on property taxes, which collapsed with the property bubble bursting out. The growing deficits and spiraling debt resulted in the financial markets losing confidence in the ability of the country to pay back what was owed, making it difficult for the state to borrow money at sustainable rates.