European Fiscal Policy During the Crisis: An Irish Perspective. ESRI Research Notes 2015/3/3

McQuinn, Kieran (2015) European Fiscal Policy During the Crisis: An Irish Perspective. ESRI Research Notes 2015/3/3. UNSPECIFIED.

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Abstract

The ongoing approach of the European authorities to the difficulties in the Greek economy and the broader response to the financial crisis of 2007/2008 reveal significant policy shortcomings, which warrant some comment. This is especially the case from an Irish perspective as Ireland has, on a number of occasions, been held up as an ‘example’ in contrast to the Greek case, and as an example of the successful response by the European authorities in the post-2007/2008 financial crisis context (Sinn 2015). This characterisation however risks obfuscating one of the major structural weaknesses of the European policy response to date; namely the absence of an adequate counter-cyclical fiscal response at a European level, particularly from 2010 onwards. Moreover, European fiscal policy since that period has actually been decidedly pro-cyclical with the compounding effect of the austerity-type budgetary policies adopted impeding growth prospects and, in so doing, exacerbating the heightened levels of debt-to-GDP observed across many European countries, with Greece being the extreme case.

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