WITH CONSIDERABLE speculation about an impending deal on bank debt, with the Taoiseach and the German Chancellor jointly stating that Ireland is a ‘special case’, it is helpful to remind ourselves just how special a case we are.
Eurostat, the EU Commission’s data agency, has calculated the cost of the banking crisis in each EU country. The following focuses on the cost to general government budgets. Ireland has really taken one for Team EU.
Yes, there’s wee Ireland up at the top, just edging out Germany for the dubious title of spending the most on the banking crisis. €41 billion to date according to the Eurostat accounting data (this doesn’t count the billions ploughed into the covered banks from our National Pension Reserve Fund as this was not counted as a ‘cost’ to the General Government budget).
Of course, this doesn’t give the best picture. What happens when we look at the cost as a percentage of GDP?
Ireland may not win football’s European Championship but when it comes to banking debt we are Barcelona, Bayern Munich and Manchester United all rolled into one with Real Madrid for a bench. Germany may have run Ireland close in the nominal amount of banking debt but when it comes to a proportion of GDP, it is just pennies behind their sofa. For Ireland, it’s the entire house.
Here’s another little stat to chew on. The European banking crisis is just that – a European crisis. But as we know, this has not been addressed at European level. Rather, the cost has been delegated to individual countries regardless of their size or ability to pay. For instance:
- Ireland makes up 0.9 percent of the EU population
- The Irish economy makes up 1.2 percent of EU GDP
Ok, we’re small. So how much of the entire European banking debt have we paid?
- The Irish people have paid 42 percent of the total cost of the European banking crisis
We may be minnows when it comes to population and economic size, but when it comes to banking debt we are the whale in the pond.
One more breakdown. How much have countries paid per capita?
The European banking crisis to date has cost every individual in Ireland nearly €9,000 each. The average throughout the EU is €192 per capita. I really don’t know what you can say after that.
So, Ireland is a really, really special case. We require a really, really special solution. The Government (and we must always remember that this mess wasn’t created on their watch) has a real challenge in the negotiations over bank debt. But there is a bottom-line here.
If any deal does not qualitatively alter these dismal statistics, then it won’t be a deal worth applauding. The Government may be tempted to return to the Irish people waving a sheet of paper claiming ‘a bank debt deal for our time’.
But if are still paying nearly €9,000 each while the remainder of the EU pays only a fraction of that, then it is no deal at all; just a re-arranging of euro notes – a lot of euro notes – on the decks of a sunken ship.
Michael Taft is Research Officer with UNITE the Union; author of the political economy blog Notes on the Front where this article originally appeared; and a member of the TASC Economists Network.
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