Ireland Resists Austerity

By James McKee

Ireland’s bailout from the IMF is contingent upon severe austerity measures that many Irish politicians are resisting vehemently. If the measures do take effect civil unrest in Ireland is virtually guaranteed since the rest of Europe has already become very unstable. Riots in both France and Greece are sure signs that Ireland will probably follow suit if their country is met with the type of cutbacks that are being proposed. Among these measures is a cut to the minimum wage amount, drastic cuts to social welfare programs, public employee layoffs and greatly increased property taxes. Depending on Ireland’s reaction the Euro may suffer greatly in the Forex Currency Exchange.

Any one of these measures would surely result in protest if not outright rioting in a modern nation, the fact that they are all required for Ireland’s “bailout” is quite detrimental. If Ireland does not accept the bailout the central bank will probably call in its debt from the country and an all out economic depression will ensue within the country. Given its close proximity to both Europe and Great Britain it is likely that any fallout Ireland experiences will have grave consequences for the GBP and the EUR.

Ireland is more or less bound to accept the terms of the EU’s and the IMF’s support at this point because if they do not the country’s economy will collapse on itself. The currency currently used in Ireland is backed by their central bank (who can simply pull value out of it) who can make or break their economy. Ireland is between a rock and a hard place and the rest of Europe is waiting with baited breath to see what occurs. In the long run Ireland is better off rejecting the austerity measures and allowing their economy to collapse which would shrug off their central bank but in all likelihood they will accept the measures and perpetuate their debt.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.