Question

What are the consequences of the 2008 financial crises on government and individuals for ireland and europe? please write at least a paragraph

Answer 1

It is a common refrain among political strategists not to waste a good crisis. Seven years on from the start of the global financial crisis, we can determine whether that principle has been implemented. Europe's response was mainly one of increased government borrowing, offset by tax hike packages and spending cuts. The policies in France, Germany, Ireland, Italy, Spain and the United Kingdom were similar in some ways, but significant differences in the balance of taxes and cuts, in the targeted areas, and in the types of households affected, allowed us to draw some strong conclusions about the effects of the Great Recession.

Ireland and Spain tended to have the healthiest fiscal conditions in the years before 2007/2008; they had executed overall budget surpluses for at least the three previous years. With the onset of the crisis, however, it quickly became clear that this status was bolstered by unsustainable revenues, especially from the property market. While suffering a little less, France, Italy and the United Kingdom also saw their underlying public finances weakened by just over 5 per cent of GDP each. In other words, if they had not taken any political action at all, they would have ended up borrowing more than 5 per cent of GDP each year, forever.

To some degree, each nation has increased tax, and the essence of the tax increases that are being introduced reveals some fascinating similarities. France, Ireland, Italy, Spain and the United Kingdom have agreed to raise VAT rates and contributions to social insurance. France, Spain and the United Kingdom have introduced income tax increases affecting the highest income people, while France and the United Kingdom also chose to lower corporate tax rates thus broadening the base for that tax.

Nonetheless, the countries have made very different spending choices. France, Italy and Spain refrained from cutting welfare benefits, in stark contrast to Ireland and the United Kingdom, where cuts to pensions for adults of working age played a major role. France and the United Kingdom have both opted to afford greater security to health and education budgets, while Italy and Spain have preferred to slash these programs more drastically than other fields of government.

With many countries already running deficits above 2% of national income and holding a government debt stock well above pre-crisis rates, this won't be the end of the story. Where further spending cuts and/or tax rises are required, these could be an incentive for countries to implement changes that improve the efficiency of tax and benefit systems.