IRELAND
GEOGRAPHY
Ireland is the third largest island in Europe, almost the same size as Hungary. Ireland is divided into the Republic of Ireland, with its capital Dublin. This state is often simply referred to as ‘Ireland’ or ‘Éire’ in Irish. Northern Ireland is unofficially known as ‘Ulster’ although some parts of the historic province of Ulster were annexed to the Republic when the county was devided in 1922. The Republic of Ireland occupies about the five sixths (70,273 sq km) of the land area of the island. Northern Ireland, the north-eastern sixth belongs to the United Kingdom. The island lying in the Atlantic Ocean in a 80 km distance from Great Britain separated from it by the Irish Sea and the St. George’s Channel. Ireland is about 302 miles (486 km) long in the north-south direction and its maximum width is about 174 miles (280 km) from east to west. The climate of Ireland does not differ from those that other parts of the British Isles has. It is influenced by the Gulf Stream and with the prevailing winds predominantly from the south-west. The wind is braking on the high mountains of the west coast therefore the annual rainfall on Valentia Island (1400 mm), off the south-west coast, is almost twice as much as in Dublin on the east (762 mm).
HISTORY
Following the arrival of Saint Patrick and other Christian missionaries in the early to mid-5th century, Christianity took over the indigenous pagan religion by the year 600 AD. Irish Christian scholars excelled in the study of Latin, Greek and Christian theology in monasteries throughout Ireland. The arts of manuscript illumination, metalworking and sculpture flourished and produced such treasures as the Book of Kells, ornate jewellery, and the many carved stone crosses that can still be seen across the country. In 1782 a Parliamentary faction led by Henry Grattan (a Protestant) successfully agitated for a more favourable trading relationship with England and for greater legislative independence for the Parliament of Ireland. However, London still controlled much of what occurred in Ireland. Inspired by the French Revolution, in 1791 an organisation called the United Irishmen was formed with the ideal of bringing Irish people of all religions together to reform and reduce Britain’s power in Ireland. Its leader was a young Dublin Protestant called Theobald Wolfe Tone. The United Irishmen were the inspiration for the armed rebellion of 1798. Despite attempts at help from the French the rebellion failed and in 1801 the Act of Union was passed uniting Ireland politically with Britain. In 1829 one of Ireland’s greatest leaders, Daniel O’Connell, known as ‘the great liberator’ was central in getting the Act of Catholic Emancipation passed in the parliament in London. He succeeded in getting the total ban on voting by Catholics lifted and they could now also become Members of the Parliament in London. After this success O’Connell aimed to cancel the Act of Union and re-establish an Irish parliament. However, this was a much bigger task and O’Connell’s approach of non-violence was not supported by all. Such political issues were overshadowed however by the worst disaster and tragedy in Irish history. In the history of the country it’s important to mention the ‘war of independence’ when the Irish Republican Army the army of the newly declared Irish Republic – waged a guerilla war against British forces from 1919 to 1921. One of the key leaders of this war was Michael Collins. In December 1921 a treaty was signed by the Irish and British authorities. While a clear level of independence was finally granted to Ireland the contents of the treaty were to split Irish public and political opinion. One of the sources of division was that Ireland was to be divided into Northern Ireland (6 counties) and the Irish Free State (26 counties) which was established in 1922.
SOCIAL CULTURE AND RELIGION
Irish culture has many different meanings. There are some symbols which are unique to Ireland. Ireland is often called the ‘land of saints and scholars’ referring to the golden age of monastic learning, or ‘the emerald isle’ referring to the green landscape. Popular culture in Ireland is very similar to many other Western countries in terms of TV, cinema and popular music and literature. However, one aspect of popular culture in Ireland that makes it somewhat different to other cultures is pub culture. The term ‘pub’ refers to a ‘public house’ or bar. While there is a recognised issue of over-consumption of alcohol in Ireland, pub culture is about more than just drinking. Typically pubs are important meeting places, where people can gather and meet their friends in a relaxed atmosphere. The character of pubs varies widely according to the customers they serve, and the area they are in. Since 2004 it is illegal to smoke in an enclosed place of work in Ireland, including pubs.
Traditionally Irish society has been one of emigration. For hundreds of years more Irish people left Ireland than immigrated to Ireland. The most notable periods of emigration were following the famine in 1845 and more recently in the 1950s and 1980s when large numbers of Irish emigrated to look for a better life. This has changed since the late 1990s when the economy of Ireland improved dramatically. Since then many people have immigrated to Ireland. Although emigration has been a constant feature of Irish society, the late 1990s also saw a trend of Irish emigrants returning home to live in Ireland. Many millions of people around the world particularly in the UK, USA, Australia, Canada and New Zealand claim Irish ancestry. For many generations most Irish people have had family that live in other countries, something that is now also characteristic of migrants to Ireland. Irish people have the reputation of being very friendly. Generally people will shake hands when they meet for the first time. Friends will hug or just say hello. Sometimes people will kiss on the cheek if they know each other well. People generally make eye contact because it is a sign of trust and that you are interested in what they are saying. Irish people will generally say ‘thank you’, for example, when getting off a bus most people will thank the bus driver.
Sometimes it may seem as if time keeping is not very important in Ireland. Generally when someone arranges to meet you at 8pm this will usually mean 8.15pm or later. Irish people, in general, are very relaxed about time.
POLITICS
General elections were held in February 2020, in which no party secured a majority but Fianna Fáil won the most seats. After months of coalition negotiations disrupted by the COVID-19 pandemic, traditional rival parties Fianna Gail and Fine Gael formed a coalition government for the first time, along with the Green Party. The Fianna Fáil leader Micheál Martin was elected as Ireland’s taoiseach (prime minister) in June, succeeding to Fine Gael’s leader Leo Varadkar. The latter, one of the youngest politicians to hold the post of Prime Minister, had been criticised for his management of the housing crisis, health service failures and the significant costs overruns of key infrastructure projects. Varadkar was nonetheless praised for his skilful handling of the Brexit negotiations between the UK and the EU. The Sinn Féin president Mary Lou McDonald, whose party won the second-highest number of Dáil seats, said that Fianna Fáil and Fine Gael had conspired to exclude Sinn Féin from government (The Guardian). After three years of conflict, the British Parliament voted in December 2019 in favor of the plan to leave the EU proposed by Prime Minister Boris Johnson. The last of the many deadlines for reaching a trade agreement was set for December 31, 2020, with no possibility of extending this transition period. Finally, on Christmas Eve, a ‘thin deal’ was signed, leaving much topics unsettled, to avoid a catastrophic exit without a deal. The stakes are crucial for Ireland because of its privileged trade relations with the United Kingdom and its land border with Northern Ireland. Besides the Brexit issue, the international tax reform under the auspices of the OECD and introducing among other things a minimum corporate tax rate will be another challenge for Ireland.
ECONOMY
As a high-tech and services based economy that is highly dependent on trade, Ireland—known as the ‘Celtic Tigre’ in the early 2000s for its strong economic performance—was hit hard by the economic crisis. It now records a large deficit (1.5% of GDP in 2015), but one that has steadily decreased since 2010. The economy has been showing other signs of recovery since 2014. Since the end of the EU-IMF bailout in late 2013, Ireland has enjoyed steady economic growth, and positioned itself as the fastest growing European economy. The national economy has been supported by strong domestic demand and by the activities of multinational companies operating in the country. However, due to the COVID-19 pandemic, GDP growth fell to -3% in 2020, from 5.9% in 2019 (IMF). According to IMF estimates, economy is set to rebound in 2021 (+4.9%) and 2022 (+4.3%), supported by fiscal stimulus and liquidity-boosting measures, subject to the post-pandemic global economy recovery and the conclusion of post-Brexit transition period. In 2020, the Irish economy suffered from the successive lockdowns put in place to contain the COVID-19 pandemic. Private consumption contracted severely, although headline GDP figures remain positive due to the resilience of multinational corporations (The Economist Intelligence Unit). The Irish authorities announced a comprehensive fiscal package of EUR 24.5 billion, distributed over 2020 and 2021 (IMF), the largest in Irish’s history. As a result of the support measures, Ireland’s fiscal balance was pushed into high deficit in 2020 (-4.8% GDP), compared with a previously quasi balanced budget (-0.2% GDP in 2019). According to IMF estimates, budget deficit should decline to -2.4% GDP in 2021 and -0.5% GDP in 2022. Public debt also increased, from 57.3% GDP in 2019 to 63.7% GDP in 2020, and is expected to decline to 61.3% GDP in 2021 and 59.2% GDP in 2022 (IMF). The moderate 0.9% inflation of 2019 turned into deflation in 2020 (-0.2%), but is expected to pick-up in 2021 (0.6%) and 2022 (1.9%) (IMF). Ireland is expected to get around 5% of GDP in EU grants and loans until 2023, to mitigate the economic and social impact of the Covid-19 crisis and facilitate the green and digital transitions. The Budget 2021 contains an additional stimulus of 1.7% GDP and is focused on ‘extending the income support measures, providing targeted support to the hospitality sector, and increasing health and housing spending, as well as strengthening the green agenda’ (IMF). The main challenge in the short term is to contain the spread of a new variant of COVID-19, as infections rates were among the worst in the world in January 2021. Moreover, the Irish economy remains very volatile due to the weight of multinationals in the economy. The prospect of a hard Brexit (a Brexit without a deal) is a major concern as the United Kingdom is Ireland’s second largest trading partner, and has the only land border between Ireland and the future ex-member of the EU. Agriculture remains a key sector as the government seeks to strengthen its role in the economy by modernising it and transforming the food processing industries (beef, dairy, potatoes, barley, wheat). The beef and dairy categories are the largest and account for nearly 70% of Gross Agricultural Output (GAO). Other sectors to have a share in GAO include pig, sheep and cereals. Agriculture represents 0.9% of GDP and employs 4% of the labour force (World Bank, 2020).
Ireland’s recent industrial development was achieved through a deliberate policy of promoting advanced export-oriented enterprises, and partly through attractive offers for investors. The sector accounts for 35.2% of GDP and employs 19% of the active population. Textiles, chemicals and electronics perform particularly well.
The service sector accounts for nearly 56.7% of GDP and employs more than three-quarters of the labour force (77%). Banking and finance have grown to such an extent that Dublin counts now as an important international financial centre, while tourism has become an important source of foreign exchange earnings. In 2020, tourism accounted for EUR 9.2 billion, with 265,000 people employed according to the Irish Tourism Industry Confederation (ITIC).
In 2020, most Irish economic sectors were affected due to the COVID-19 pandemic. If the pharma-chemical and technology firms have been resilient, the most impacted sectors include retail, travel and hospitality. According to ITIC, as of November 2020, the accommodation and food service activities were the sectors with the highest number of people in receipt of the Pandemic Unemployment Payment (PUP), with 98,233 recipients, followed by wholesale and retail trade (51,921), and arts, entertainment and recreation (11,400).
INTERNATIONAL RELATIONS
Ireland is a very open economy, and therefore very dependent on the international economic situation and vulnerable to external shocks. Trade accounted for 239% of GDP in 2019 (World Bank). Ireland’s main imports are air aircrafts, biological materials, medicine, automatic data-processing machines, oil and petroleum products and automobiles. The country exports mainly biological materials, medicines, industrial raw materials, and medical devices. In 2020, due to the COVID-19 pandemic, the volume of imports of goods and services dropped by -12.1% compared to 2019, while exports only increased by 1% (IMF). The IMF forecasts an increase of exports in 2021 (+5.3%) and 2022 (+5%) and an even stronger rebound of imports (+6% in 2021 and +5.5% in 2022).
Ireland’s main trading partners are the European Union (the United Kingdom is the main market for imports and the second largest for exports), the United States, China and Switzerland. The UK’s withdrawal from the EU (Brexit) raises many questions around the future relations between Ireland and its main trade partner. Irish exports are expected to slow down and to suffer from a depreciated sterling pound. The renewed protectionism of the United States and the new tax regime which benefits American companies could also impact trade.
The Irish trade balance is structurally in surplus. According to the WTO, in 2019 Ireland exported goods with a record total value of USD 169.6 billion, while it imported goods worth USD 99.8 billion. The country exported for 238.6 billion USD of services in 2019, and imported for a value of 321.9 billion USD. According to World Bank data, trade balance reached a surplus of USD 137.5 billion in 2019. As imports dropped under the effect of the pandemic in 2020, the trade surplus increased even further.