The year the sun came out – for some

Like any nation, we tell ourselves stories to make sense of the world. And if there’s one thing that drives a storyline – be it a tawdry soap or an against-all-odds epic – it’s redemption. As any good storyteller knows, the more hideous and painful the journey, the greater the sense of joy at the end.

So the departure of the troika at the tail end of 2013 gave us a perfect narrative arc. After five years of gruelling austerity, this is the year the dark clouds began to part and a sunlit higher ground began to appear on the horizon.

We became the first euro-zone country to exit an international bailout. We finally pulled out of recession, and unemployment began to fall. Even the property market sprang back into life.

ExpandAutoplay

Image 1 of 4

State of the nation: Enda Kenny’s television address. Photograph: Dave Meehan

"Ireland is now moving in the right direction. Our economy is starting to recover," Taoiseach Enda Kenny told the nation, in a televised address earlier this month to mark the end of the bailout. But there are two sides to every story. For all the positive mood music, the acid test is whether ordinary people feel any better off.

Ireland might well have been, in the view of Forbes magazine, the best country in the world in which to do business this year, but it was cold comfort to those trapped with a crippling mortgage or to families on reduced incomes struggling to make ends meet.

For many young people this year, work simply wasn’t an option, and every six minutes or so another person voted with their feet and moved abroad for work.

A growing realisation set in that there will be no return to the good old days anytime soon. Debt from bailing out our banks will continue to weigh heavily on us all for decades to come in the form of taxes and charges. Forecasts suggest all we have to look forward to is anaemic growth over the coming decade.

Worrying signs suggested that our fragile recovery is distinctly two-tiered, with some gaining ground while others are left behind. Few, then, believe this story will have a fairytale ending. There’s been too much sacrifice, too much pain, for that.

Overall, our prospects are more encouraging than they were 12 months ago. There is, we’re told, just one more austerity budget to come. Then we’ll have a chance to draw breath, we hope.

This was the year redemption looked as if it might be around the corner. And even if day-to-day reality remains bleak for many, it’s a story we desperately want to believe.

So how real is this story of recovery? If jobless figures are a barometer of a country’s economic health, there were encouraging signs during 2013 for the first time in years.

Unemployment fell below 400,000 for the first time since May 2009. But dig deeper and a detailed breakdown of the figures indicates that much of this is down to emigration. Job creation picked up over the year, but if it wasn’t for mass emigration our rates of unemployment would be significantly higher.

Levels of unemployment among young people – almost 30 per cent – are alarming. Many have been drawing the dole for a year or more and are classified as long-term unemployed. Thankfully, the rate of long-term joblessness also began to fall this year.

Job-creation figures look encouraging, although signs are emerging of a two-speed economy. While the shiny glass office blocks around Dublin’s “Silicon Docks” have seen job growth, rural areas are still struggling to cope with depopulation, shuttered main streets and poor job prospects.

Job growth is healthy in high-tech industries, but lower-skilled sectors are continuing to struggle. While employment in IT, technical and scientific areas grew, employment continued to fall in areas such as construction (down 4 per cent) and transport (also down 4 per cent).

Property prices also began to rebound. But here, too, were signs of a two-tier recovery. In Dublin the market increased by 15 per cent over the course of the year, prompting fears of another property bubble. It seemed we’d learned nothing as the madness of the boom years and a shortage of family homes resulted in some staggering price increases.

Outside the capital it was a different story. Increases in property prices were slower if not static, with thousands of houses and retail units lying vacant.

No one seemed sure what to make of it all. Industry experts – surprise, surprise – contradicted each other: some suggested the price rises in the capital were the early stages of a recovery; others speculated it was the start of a property bubble caused by supply shortages.

Inward investment also picked up, with the US chamber of commerce producing a startling figure: US investment in Ireland was on a similar scale to US investment in all of Asia.

These economic indicators looked encouraging. Suddenly, we were the darling of the financial press (again) and the poster child for austerity. The leaders of the euro zone were even moved to note how well we stuck to our spending programme. "We congratulate the Irish authorities for the successful implementation of the programme," they said, in a joint statement last month. "Ireland is a living example that EU-IMF adjustment programmes are successful, provided there is a strong ownership and genuine commitment to reforms."


On the ground it was often hard to reconcile the congratulatory rhetoric with grim reality. If anything this was the year emigration seemed to become formalised as a an instrument of national policy.

Young people were sent letters by social welfare telling them of opportunities abroad. And just in case the message hadn’t got through, jobseekers’ payments were slashed by up to a third for the under-25s in October’s budget.

The idea behind the move – to encourage people into training or education – might have made more sense if we had the places available. But latest figures indicate the number of places for young people is half what is needed. So emigration remained for many a more realistic prospect than a well-paid job.

This year we also began to see how the economic crash and austerity policies, such as welfare cuts and reduced public services, are affecting children.

The Growing Up in Ireland report, a longitudinal survey of 11,000 children and their families, revealed that one child in every four was living in a home where nobody had a job. These are homes where there are difficulties putting food on the table, paying bills and making ends meet.

It also showed that 61 per cent of children were living in families where there was financial stress. These are homes where there is likely to be even more strain on relationships.

Perhaps the starkest reality was that the health of the children in families where there was no work declined substantially after the bank bailout. In September 2008, 79 per cent of these children were classed as “very healthy”. By 2011, this figure dropped to 67 per cent.

Inequality also widened. In fact the gap in health between the best-off and worst-off children doubled in size in the three years after the bank guarantee

The flip side of continued fiscal responsibility and austerity was, to many eyes, a fiscal recklessness that simply stored up huge costs for this and future generations.

Ireland still has to repay its bailout loans – which will see public debt reach a whopping €200 billion – and stick to strict rules on reducing its debt long into the future. This debt is projected to soar next year, to the hair-raising figure of 124 per cent of gross domestic product (the value of all goods and services produced in the country in a single year).

That’s the national debt. Personal debt remained as urgent a problem as ever this year, despite new insolvency laws and pressure on banks to do more with stuggling mortgage-holders.

Almost a fifth of mortgage-holders were in arrears by the end of this year, but at least the number has stopped increasing. Those households that are struggling to pay mortgages – and more besides – will be highly vulnerable should ECB rates eventually rise.

Economic commentators agree it will be some time before a recovery becomes tangible for many households, and these economic figures translated into continued emigration, unemployment and reduced prospects for many families.

Furthermore, homelessness reached the highest level in decades, according to campaigners. The number of people sleeping rough in the capital jumped by about 50 per cent in the space of six months, while charities struggled to cope with record levels of requests for housing and support.

The human toll of the downturn and austerity policies might have proved more palatable if it had been distributed fairly and protected the most vulnerable. The Government, after all, said this was its approach all along.

ESRI figures produced at the end of the year showed the opposite. An analysis of October’s budget revealed that the poorest, proportionately, shouldered the heaviest burden. Top earners also took a heavy hit. And for those in the squeezed middle, who might have felt hit hardest of all, there was a surprising finding.

The researchers concluded that, contrary to perceptions of a sharper squeeze on middle-income groups, they suffered smaller losses than those at the top and the bottom.

But, in truth, a combination of property taxes, cuts to child benefit, more expensive health insurance and countless other income-sapping measures have made everyone feel poorer.

For all that, everyone loves a story of redemption. It remains one of the most potent public narratives there is. But a recession that never seems to end has left many resigned to simply hanging on.

The smoke is still clearing from the wreckage of the economic crash, and we’re shuffling through the embers to see what remains: a health service under strain, a welfare state that is significantly reduced, and lowered expectations for most of us.

The Taoiseach, in his national address earlier this month, was careful not to raise expectations, saying, “Our lives will not change overnight.”

One final austerity budget will be required to deal with the Government’s shrinking deficit, or so Government sources say. But, even after next year, onerous EU targets to meet to reduce our debt will remain for the next decade or more.

Could it be, as suggested by the US economist Paul Krugman, whose columns The Irish Times carries, that depression-like conditions may persist not for another few years but for decades? Time will tell. In any case, the Irish Fiscal Advisory Council, a budget watchdog set up after the financial crash, recently warned there was no room for tax reductions until after 2016.

This was not a year where we paused, took stock and had a national conversation about the lessons we’ve learned, what kind of society we want to rebuild or how we should reform our battered institutions.

Instead we continued with a helter-skelter approach to cost-cutting in areas such as health, education and public services, rather than any thought-out conception of what might replace them in the future. The only sop to political reform this year was a referendum to abolish the Seanad, which most voters saw as a cynical gesture when they voted to reject the amendment.

All in all, our fragile economic recovery remains perilous. Major problems confronting Italy and France could trigger a sudden loss of confidence that could put this country back in the firing line. But, for the time being, we can be positive about improved economic forecasts and sunnier consumer sentiment.

This, then, was a year when we seized the first signs of recovery and hoped for the best. It’s too late for a happy-ever-after, but at least that higher ground is coming into focus.