If the phrase “American recession” is typed into Google, headlines such as “Deep Recession in America: The Crash of 2009, The Collapse of 2010” and “The Great Recession of 2011-2012” appear. However the feelings of economic uncertainty are not only being felt here in the US, but across the globe in the Republic of Ireland. The ripple of debts and deficits throughout the global economy are now being felt in Ireland, where the government has accepted a European Union bailout. It seems as though deficits and debt are becoming the norm throughout the world, as Ireland’s recent financial aid follows Greece’s similar bailout that has continued since May.

This dismal state of the economy follows the boom of the 1990s, when the Irish Republic’s low taxes caused high economic growth and drew in multinational companies. However since 2008, several areas of Ireland’s once strong economy have crumbled, most notably the real estate market. The country currently has a debt of 32% of the GDP (Gross Domestic Product), or a -32% GDP, this year. The European Union’s limit on the euro budget deficit is 3% and last year Greece’s debt was 15% of the GDP. The GDP is, in layman’s terms, the ‘size’ of the economy and is used in comparison with the previous year. Therefore, the size of Irish economy has decreased by 32% compared to the previous year, a drastic reduction. The troubles don’t end there; the country is spending 12% more of its GDP on public services than it receives from taxes. The unemployment rate in Ireland has gone from 4.5% in early 2000 to 5.1% in mid 2008 to its current rate of 14.1%

All of these issues led to Ireland’s unavoidable acceptance of a series of loans from the European Union (EU) and the International Monetary Fund (IMF) on November 21, 2010. However, this decision was made recently because before November 18^th, the Irish government had denied the need for a EU bailout. As recently as November 15^th, Irish Prime Minister Brian Cowen stated that the government was “determined to work our way through these issues,” without a bailout. Enterprise Minister, Batt O’Keeffe, who said “It has been a very hard-won sovereignty for this country and the government is not going to give over that sovereignty to anyone”, gave one possible reason for the resistance to a bailout. Analysts speculate that Ireland allowed a bailout because Ireland relies heavily on overseas investments and if it reneged on its loans, future Irish banks would have trouble getting money in similar situations. Most of Ireland’s debt lies in government led banks, and if these banks could not repay their loans, the nation as a whole would have a low credit rating. To avoid such major problems both now and in the future, the Irish government has accepted money from the EU and IMF.

One issue with Ireland’s bailout is its low tax rates, which lured in foreign business during its peak and the government hopes will continue to lure businesses as it pulls itself out from this deficit. Ireland wants to keep this low rate during and after its bailout, but Germany and France argue that it is “an unfair way of luring companies to Ireland at other European countries’ expense” (WSJ).

Some analysts believe that “the risk of contagion is rising, the longer it takes [for Ireland to react]”, and hope that with Ireland’s bailout, the European Union and the state of the Euro will improve. The economic steps being taken halfway around the world could be just what the global economy needs to lift us out of recession. As C.S. Lewis said, “What saves a man is to take a step”. Who knows what this step could do?