Ireland appears to be emerging successfully from the economic blight it has suffered for more than five years.
Ireland’s prime minister, Enda Kenny, says his country will exit in December from the multibillion-dollar bailout plan, crafted by the International Monetary Fund and European Union, that it has operated under since November, 2010.
Ireland was forced to seek the rescue package when a real-estate bubble and subsequent economic and financial setbacks, including in its banking sector, resulted in emigration. An estimated 250,000 jobs were lost in a short time — a catastrophic development for a country of Ireland’s size.
Mr. Kenny, who became prime minister in 2011, introduced a drastic three-year recovery plan. It included sharp reforms to government finance, including reductions in budget deficits by cutting expenditures and raising taxes.
But Ireland’s corporate tax rate remained at 12.5 percent to attract foreign and domestic investment. Despite considerable moaning about the belt-tightening, the plan seems to have worked.
Job creation is at its highest level in five years. A budget surplus is anticipated next year. Growth for 2013 is predicted at a modest 1.1 percent, but is expected to rise to 2.2 percent in 2014. An exit from the bailout program will mean that Ireland’s fiscal independence will have been restored after three years of austerity and careful management.
Ireland’s performance is also good news for the European Union. Its more economically successful countries, notably Germany, have staggered for years under the financial weight of the woes of Ireland, Greece, Portugal, and Spain.
Ireland took its medicine without choking its economy. It is encouraging that Ireland now has a chance to reclaim its “Celtic Tiger” label.
Ireland pulled itself out of an economic tailspin through a judicious combination of budget cuts and tax increases that seems to be resulting in renewed prosperity. The United States might do likewise.