The Irish economy is like a dog barking and wagging its tail at the same time. It’s hard to know which end to believe. The bark is housing, emergency department overcrowding, the lack of mental health services for young people, things that make a nonsense of our status as a prosperous western European country.
The wagging tail is the turbocharged GDP (gross domestic product) growth. Figures last week show the Irish economy grew by a whopping 12.2 per cent last year despite the cost-of-living squeeze and the global headwinds caused by Russia’s war in Ukraine.
This was the strongest level of growth recorded anywhere in Europe, double that of the next best country Portugal (6.5 per cent) and almost four times the EU average (3.3 per cent). It is also credited with pushing GDP for the euro area as a whole into positive territory and potentially saving the bloc from falling into recession, a case of the tail wagging the dog.
Add to this the welter of corporate tax receipts that have flooded into the exchequer in recent years, a reflection of Ireland’s elite status as a destination for foreign direct investment (FDI).
The IDA, the agency responsible for the attraction and retention of foreign investment, is viewed internationally as the Real Madrid of state investment agencies, with 24 of the top 25 global pharma giants and a who’s who of big tech located here.
From an outsider’s perspective it might seem like the Celtic Tiger is roaring again. From an insider’s perspective the picture is considerably more nuanced. From the perspective of those exposed to high rents and long commutes, the idea of a new Celtic Tiger is nonsense.
Expensive housing and stretched health services are perhaps part and parcel of modern western democracies. US economist JK Galbraith used to refer to it as “private affluence and public squalor”. He was talking primarily about the US where the divide between rich and poor, public and private, is more stark.
Ireland’s conundrum is not whether to follow Boston’s growth model or Berlin’s social model, as if such a binary option existed, but how to leapfrog decades of underinvestment and bad planning, a legacy that has caught up with us in spectacular fashion.
Public services and infrastructure simply haven’t kept pace with the rapid rise in the private sector here. Between 2014 and 2019 the Irish economy grew by more than 50 per cent. The surge created more than 400,000 jobs – 25 in the private sector for every one in the public sector.
There’s been another surge in activity since Covid, driving us back to near full employment. There are now a record 2.5 million people working in the State, 150,000 higher than prior to the pandemic in 2019. The additional demand has sapped the capacity of State services. Everywhere you look there are bottlenecks. Housing, the most formidable one, has its own trajectory in all this with demand exploding and supply imploding at the same time in the middle of the last decade.
The Organisation for Economic Co-operation and Development (OECD) noted in a recent report that Ireland’s housing crisis can be traced back to a “decade of underinvestment” after the 2008 property crash. While the population grew by 263,000 between 2009 and 2017, the housing stock grew by just 35,000 units, it said.
The twin-track nature of the Irish economy has become increasingly divisive and is now providing a lit match for a new and insidious far-right element within the country.
In the anti-immigrant protests of recent weeks many local voices seemed to frame their opposition to refugees around stretched public services, even if others appeared to have a purely racist agenda.
A briefing document drummed up for the Cabinet committee set up to deal with the accommodation of Ukrainian refugees, seen by The Irish Times, highlights the pressure on public services in areas where many of the refugees have been located.
“Public services in certain areas where there is a high concentration of IPs [International Protection applicants] and BOTPs [Beneficiaries of Temporary Protection] are under strain,” it says. BOTPs is the technical name given to those fleeing the Ukraine war. “Time is urgently required to plan in detail for integration, given rising community cohesion, tension and disruption concerns, and exploitation by the far-right,” the document states.
More than 151,000 migrants came to Ireland in a single year back in 2007 on the back of EU enlargement – to date the highest ever annual influx. Within two years the economy nosedived into recession and unemployment. That sort of economic collapse is traditionally seen as fertile ground for far-right, anti-immigrant politics. Yet no such platform materialised at that time.
One of the possible reasons put forward for the lack of anti-immigrant sentiment here was our own history of emigration, and Irish people being treated with disdain in the countries they moved to. That led many to think Ireland, unlike many other nations going through a similar economic slide, just didn’t have the appetite for such politics.
Now, though, that theory is being put to the test.