The EU gave us loads of money?

William F

I have a limited understanding of economics but it happens to be the topic of discussion with a lot of foreigners I meet.

The topic around Ireland's economy often pops up and I've heard it on more than one occasion said that Ireland's past economic performance was down to the EU giving us 'loads of money'.

Hearing this would would make you think that the economies' good performance during the Celtic Tiger was down to handouts given by the EU.

Is this true? I had always thought that our economies good performance was down to the low corporation tax and not 'handouts' as a it is often suggested by foreigners.

BoJack Horseman

It played a part, but it wasn't the only reason.

Nody

William F wrote: »

Is this true? I had always thought that our economies good performance was down to the low corporation tax and not 'handouts' as a it is often suggested by foreigners.

Try cheap labor, grants for placing factories in Ireland (subsidised by EU) combined with cheap land, improvements in road network (paid by EU), tax discounts (i.e. the cheap tax was because of not having to pay tax for RD&Q etc. for X years and not the official headline rate as those discounts were approved by EU) etc.

Keep in mind the corp. tax has not changed yet the Irish tiger crashed a long time ago which should give you an idea that the tax alone was far from the only part needed for the Irish Tiger.

Godge

You can get information on how much was spent in Ireland from websites like this:


http://www.iro.ie/EU-structural-funds.html

http://eustructuralfunds.gov.ie/

For example, a large part of our motorway network was funded by Brussels.

Here is an academic paper from the early 2000s about the influence of the EU money.

http://www.tcd.ie/business/staff/fbarry/papers/papers/jcms.PDF

They estimate a direct effect of 0.5% increase a year in GNP during the 1990s, with an unquantified indirect effect as well.

William F

Godge wrote: »

You can get information on how much was spent in Ireland from websites like this:


http://www.iro.ie/EU-structural-funds.html

http://eustructuralfunds.gov.ie/

For example, a large part of our motorway network was funded by Brussels.

Here is an academic paper from the early 2000s about the influence of the EU money.

http://www.tcd.ie/business/staff/fbarry/papers/papers/jcms.PDF

They estimate a direct effect of 0.5% increase a year in GNP during the 1990s, with an unquantified indirect effect as well.

Do we have to pay it all back at some stage or what?

To me it looks like compensation for all the damage the British done during their reign if terror.

Geuze

William F wrote: »

Do we have to pay it all back at some stage or what?

No, Structural / Cohesion funds are grants, not loans.

Geuze

William F wrote: »

To me it looks like compensation for all the damage the British done during their reign if terror.

It's nothing to do with our colonial past.

Its compensation for regional disparities, perhaps exacerbated by the Single Market.

Godge

William F wrote: »

To me it looks like compensation for all the damage the British done during their reign if terror.

What????

Icepick

Godge wrote: »

What????

You gotta wonder if he asked because he wanted to learn something or to shoe in some stupid conspiracy theory.

fly_agaric

William F wrote: »

To me it looks like compensation for all the damage the British done during their reign if terror.

You can't see very well so I think (unless that was a joke)! The Germans are the biggest EU paymasters, then the French. I don't know what they would be compensating us for.

Also (as a side benefit) all the money had to be spend on somewhat useful stuff under EU direction. We of course would have píssed it all away on guff and air if allowed to!

Slydice

Basically it goes something like this:

- We got loans
- We couldn't afford to pay back the loans
- They gave us new loans to help sort out our not being able to pay the original loans
- We're struggling to pay back the new loans

cerastes

Slydice wrote: »

Basically it goes something like this:

- We got loans
- We couldn't afford to pay back the loans
- They gave us new loans to help sort out our not being able to pay the original loans
- We're struggling to pay back the new loans

that seems very simplistic

WE didnt get loans, mostly loans we got are still being paid off, by we.

Some private entities were funded by investment in an unsustainable business model, even when the end was near they were still doing dodgy deals.

We took on their losses because our politicians were either threatened or simply shat themselves and wanted to push the problem down the road.

Ren2k7

It helped but a lot of the boom was down to FDI, favourable tax conditions (the Double Irish), the auld "well educated workforce", the IDA, Enterprise Ireland, infrastructure spending, among other reasons.

Geuze

Slydice wrote: »

Basically it goes something like this:

- We got loans
- We couldn't afford to pay back the loans
- They gave us new loans to help sort out our not being able to pay the original loans
- We're struggling to pay back the new loans

Incorrect.

Structural Funds were not loans, they were grants.

Riskymove

William F wrote: »

To me it looks like compensation for all the damage the British done during their reign if terror.

we did plenty of damage to our own economy and infrastructure etc. ourselves without the help of the British!

golfwallah

It wasn't all one way traffic of benefits from the EU to Ireland.

We also signed up to agreements for the benefit of the EU overall, e.g. as regards marine fishing in Irish waters, on which we could have done a lot better with benefit of hindsight, and agriculture, limiting dairy production (now being removed).

On the other hand, we also have free access to a huge EU market and have been successful in exploiting this advantage, if you look at our export figures.

By and large the EU has been a force for economic good and social cohesion, in my view, despite occasional set backs, such as the current economic downturn, weaknesses in the single currency and banking system and mistakes like giving away too much on fisheries. But it's an ongoing process - just think about how Ireland might fare on our own outside of the EU!

aliveandkicking

Slydice wrote: »

Basically it goes something like this:

- We got loans
- We couldn't afford to pay back the loans
- They gave us new loans to help sort out our not being able to pay the original loans
- We're struggling to pay back the new loans

This thread is nothing to do with bailout loans. Maybe have a read of the thread again.

Sand

William F wrote: »

I have a limited understanding of economics

To me it looks like compensation for all the damage the British done during their reign if terror.

Fair enough.

I've heard it on more than one occasion said that Ireland's past economic performance was down to the EU giving us 'loads of money'.

By the last figures I saw, the total EU grants to Ireland over 40 or so years were greatly exceeded by the Irish grants to bondholders of AIB, BoI, and the Bank Formerly Known As Anglo-Irish in a single night of unhindered generosity in September 2008. That should put the value of direct EU grants into its proper context.

The true value of EU membership is access to the common market, and perhaps also the social liberal benefits of EU forcing extremely socially conservative political forces to legislate for reality.

quadrifoglio verde

Sand wrote: »

Fair enough.



By the last figures I saw, the total EU grants to Ireland over 40 or so years were greatly exceeded by the Irish grants to bondholders of AIB, BoI, and the Bank Formerly Known As Anglo-Irish in a single night of unhindered generosity in September 2008. That should put the value of direct EU grants into its proper context.

The true value of EU membership is access to the common market, and perhaps also the social liberal benefits of EU forcing extremely socially conservative political forces to legislate for reality.

As far as I remember the eu leaders were fairly angry with the Irish gov. For guaranteeing all deposits and liabilities.

Sand

quadrifoglio verde wrote: »

As far as I remember the eu leaders were fairly angry with the Irish gov. For guaranteeing all deposits and liabilities.

From what I remember the EU leaders still haven't figured out what to do when a banking crisis hits, more than 7 years later. Personally I'd say, leave the banks to burn and only step in to prop up banking services...but that was apparently a bad idea too. So you just cant win.

Jim2007

Sand wrote: »

By the last figures I saw, the total EU grants to Ireland over 40 or so years were greatly exceeded by the Irish grants to bondholders of AIB, BoI, and the Bank Formerly Known As Anglo-Irish in a single night of unhindered generosity in September 2008. That should put the value of direct EU grants into its proper context.

To equate the EU grants to the bondholders is total nonsense, since it totally ignores the fact that a great many of the so called bondholders are in fact asset managers.

That implication being that those bonds are constituent parts various financial products that they have in turn sold on to various pension funds, government bodies, charitable institutions and of course that product favoured by Irish investors - capital guaranteed investments! Now there is not much call for Irish bonds on the world market, so it is a very good bet that most of those products are held by investors in the British Isles.

Sand

Jim2007 wrote: »

To equate the EU grants to the bondholders is total nonsense, since it totally ignores the fact that a great many of the so called bondholders are in fact asset managers.

I didn't equate them, I compared them. The overall insignificant nature of the EU grants is highlighted by their total over 40 years was less than a single days generosity by Irish taxpayer to the bondholders of AIB, BoI, and Anglo Irish, amongst others.

As I said, the key benefit of the EU to Irelands economic growth was access to the common market. People trying to pretend the direct grants were more decisive have an agenda.

William F

fly_agaric wrote: »

You can't see very well so I think (unless that was a joke)! The Germans are the biggest EU paymasters, then the French. I don't know what they would be compensating us for.

Also (as a side benefit) all the money had to be spend on somewhat useful stuff under EU direction. We of course would have píssed it all away on guff and air if allowed to!

yes it was a joke but it didn't stop greece asking the same of germany not so long ago.

I can't believe ireland was still paying loans back to the British in the 30s after all they did. It should of been the other way around.

William F

William F wrote: »

I can't believe ireland was still paying loans back to the British in the 30s after all they did. It should of been the other way around.

Debatable. The annuities were essentially compensation for having appropriated private property, and did a great deal of damage to the Irish countryside by creating farms that were too small to be efficient, a disastrous outcome from which Irish agriculture is only now emerging.

jmayo

William F wrote: »

I have a limited understanding of economics but it happens to be the topic of discussion with a lot of foreigners I meet.

The topic around Ireland's economy often pops up and I've heard it on more than one occasion said that Ireland's past economic performance was down to the EU giving us 'loads of money'.

Hearing this would would make you think that the economies' good performance during the Celtic Tiger was down to handouts given by the EU.

Is this true? I had always thought that our economies good performance was down to the low corporation tax and not 'handouts' as a it is often suggested by foreigners.

Take a look at a lot of our roads.
Ever notice those signs about European grants on them ?
Take a look at most farmyards and you will see example of EU grants.

While the EU didn't offically fund our economy it damm well helped drag us into a new century, 20th that is.

BTW if any Germans or French, etc give you any guff just resort to the old tried and trusted.
Remind them they wouldn't have a pot to p*** in if it wasn't for the Americans after WWII.
Yes it is crude, but it is also damm well true and some of these countries forget their past.

And if they drag in that we didn't even fight remind them how many Irish served either freeing their ancestors or killing their ancestors.

A Tyrant Named Miltiades! wrote: »

Debatable. The annuities were essentially compensation for having appropriated private property, and did a great deal of damage to the Irish countryside by creating farms that were too small to be efficient, a disastrous outcome from which Irish agriculture is only now emerging.

Yeah we should have just continued with the landed gentry and some peasant farmers renting at the behest of the landed gentry.

BTW where did those in those private properties get it in the first place ?
Oh yeah Cromwell and his ilk bought it rather than appropriated it, displacing the orginal owners in the process. :rolleyes:

Scofflaw

Sand wrote: »

I didn't equate them, I compared them. The overall insignificant nature of the EU grants is highlighted by their total over 40 years was less than a single days generosity by Irish taxpayer to the bondholders of AIB, BoI, and Anglo Irish, amongst others.

As I said, the key benefit of the EU to Irelands economic growth was access to the common market. People trying to pretend the direct grants were more decisive have an agenda.

I doubt anyone is claiming they were more decisive, but it requires something of an agenda to ignore the fact that the bank bailouts took place in an economy which was a very different size to its size when EU funds were a noticeable part of GDP growth.

I don't think you'll find a single economist who would accept your use of the word "insignificant" there.

regards,
Scofflaw

macraignil

One of the links posted earlier quotes a sum of structural funds from Ireland joining the EU as amounting to 17billion euro.

Over that time house prices were allowed to spiral upwards. My parents building in the 1970's had a basic house built for less than 10,000pounds. This required mortgage payments for years on a high rate of interest. When leaving second level school interst rates were still relatively high but prices had already increased to about 100,000euro to buy a basic house. Finishing university in the early 2000's reduced interest rates with the new euro currency also saw banks forget normal limits to mortgage lending. From a standard limit of lending less than four times a persons income, mortgages were then being given at amounts up to seven times income. Average houses had asking prices of over quarter of a million euro and the tax take on each of these transactions made the Irish economy look in far better condition than I think it really was.

At the same time banks were giving loans of billions of euros to property developers selling into the hyperinflated Irish property market. Loans of multiple times the EU structural funds given to Ireland were taken out to buy into a property market the Irish government seemed so pleased with when everything was going up. There are examples around the country of plots of land bought to develop houses when prices were so much higher than building costs. So to get to the point while the EU gave grants of billions of euros to help Ireland develop, Irish banks took out loans of billions of euros to pay for inflating property prices.

At some stage it looks to me like the banks had lent out so much to fund property that the government had to step in to say the Irish tax payer is liable for all this bank debt and now we owe over ten times the structural funds received back to EU financial institutions including those that funded the bubble that brought the government to seek international financial bailout. So as I understand it while the EU gave us loads of money our financial wizards managed to end up with us owing many times that figure. I'm not an economist so just wondering if this summary is about right?