THE EU ECONOMY MANAGEMENT SYSTEM IN CONDITIONS OF ECONOMIC CRISIS. IRELAND’s CASE

Abstract

In 2008 the world faced a powerful economic crisis, which led to significant problems in the EU. Some states, such us Portugal, Italy, Ireland, Greece and Spain, were on the verge of default. In such conditions the EU had to take appropriate measures to save European countries. The author reviewed the measures which concerned Ireland. At the beginning of the century Irish economy showed rapid growth. But in 2010 the default threatened “The Celtic tiger”. It was conditioned by the collapse of mortgage landing system and the rapid outflow of foreign capital. As far as Ireland participates in the euro zone the other European countries are interested in the stabilization of Ireland’s economy. All measures of saving Ireland’s economy could be divided to two groups. The first group includes the measures taken by the government of Ireland. This is state financing of bank sphere, which was done without being agreed with the EU (moreover, the European council reacted negatively), and changing of tax rate approved by the EU. The second group is represented by the measures of European institutes. It includes preferential credits and suppression of sanctions for violation of Maastricht criterion in exchange for austerity budget. In Ireland’s case such policy doesn’t seem really effective. The level of Ireland’s budget deficit is more than 3 % of GDP and its current economic growth does not permit to redeem the loans. Economic problems provide political instability, that’s why Ireland’s government cannot elaborate long-term financial policy. Though European institutes managed to find consensus between different national interests, the EU needs no less than 15 years to return to pre-depression economic level.