Political and Economic Situation

The first and second Programmes for Economic Expansion (1958 and 1963), the Anglo-Irish Free Trade Agreement (1965), the Investment in Education report prepared for the OECD (1966), and entry into the European Community (1973) all contributed to development and economic growth. From the early 1960s the need for structural reforms in the Department of Education had been acknowledged. Important developments in the provision of free education (1967) and in increased participation in higher education ensued and were to make a significant contribution to economic growth.

In earlier decades, politics in Ireland was dominated by 3 major parties – Fianna Fail, Fine Gael and Labour. In more recent times there has been an increase in the numbers of new parties established, and in the number of independent candidates elected to the Dáil. The results of the General Election of 2016 are shown in the table below.

After the inconclusive results of the General Election at the end of February 2016, negotiations took place between the parties and independents to see how a Government could be formed. At the end of April 2016 a new Government was announced. This provides for a minority government led by Fine Gael with the support of some independents, and with a "Confidence and Supply" agreement under which Fianna Fail agrees to support the Government until a review in September 2018, subject to adherence to agreed key principles.  Two Ministers in the Cabinet are Independents, with the remainder being Fine Gael. An Independent Alliance has also been established to co-ordinate and strengthen the voice of independent deputies in influencing Government policies.

Northern Ireland

By the beginning of 1982 an Anglo-Irish Intergovernmental Council was formed to facilitate talks between officials of the Irish and British governments about Northern Ireland. Three years later, on 15 November 1985, the Anglo-Irish Treaty at Hillsborough was signed. This Agreement gave the Irish Government a 'constant and official involvement' in Northern Ireland affairs. However, the Agreement caused disharmony among some parties in Northern Ireland in spite of the fact that it was passed in the British House of Commons, came into force on 29 November and was recognised by the United Nations as a formal agreement. It was 1993 before genuine hope of some peaceful solution for Northern Ireland became evident. The process of seeking and building peace has continued to date at national, international and local levels.

On Thursday, 6th December, 1999 London's direct rule of Northern Ireland ended. That same day the new British-Irish agreement was sealed in Dublin. In January 2000 a new Northern Ireland assembly came into being. A number of cross-Border bodies have been jointly developed with funding from the Northern Ireland Executive, the Irish government and the British government. Prompted by a lack of trust between some of the political parties in the Executive, the Northern Ireland Assembly has been suspended over the years for temporary periods as follows:

• 12.2.2000-30.5.2000

• 11.8.2001, 22.9.2001

• 15.10.2002-8.5.2007

During these periods direct rule from London was restored.

The Northern Ireland Executive is the administrative branch of the Northern Ireland Assembly, the devolvedlegislature for Northern Ireland. It is answerable to the Assembly and was established according to the terms of the Northern Ireland Act 1998, which followed the Good Friday Agreement (or Belfast Agreement). The Northern Ireland Executive consists of the First Minister and Deputy First Minister and various ministers with individual portfolios and remits. The main Assembly parties appoint most ministers in the executive, except for the Minister of Justice who is elected by a cross-community vote.

 After elections in May 2016, the current Northern Ireland Executive consists of:

• Democratic Unionist Party (First Minister + 4 Ministries)

• Sinn Fein (Deputy First Minister + 3 Ministries)

• Minister for Justice (Independent)

The results of the Norther Ireland Assembly Elections in May 2016 were as follows:

While the result of the 2016 Brexit vote across the UK was to leave the EU, the majority of voters in Northern Ireland voted to stay. The Democratic Unionist Party was the only major political party in Northern Ireland which supported Brexit. A legal challenge is being taken at present to Brexit by some Northern Ireland politicians on the basis that UK cannot legally trigger leaving the EU without approval from the Northern Ireland Assembly. As with the Republic of Ireland, key concerns are to minimise the impact on trade and travel.

Economic Situation

From the 1970s onwards the Irish economy benefited from a rise in consumer spending, construction and business investment. The 1995 to 2000 period of high economic growth was called the “Celtic Tiger”, a reference to the ‘tiger economies’ of East Asia.

Since 2008, the Irish economy has had a number of problems including a drop in GDP growth, an increase in unemployment and emigration, a fall in tax revenue, a high level of public debt, a property crash, and challenges to be addressed in the banking system. A bailout was agreed in November 2010 of €85bn. The recovery plan agreed at that time required a significant cut in public spending, and a range of measures to stabilise finances, return to growth and correct the banking sector. Ireland exited the bailout successfully at the end of 2013.

Unemployment is now 7.9% (Quarterly National Household Survey Q3 2016) having fallen from a high of 15.0% in 2012) and GDP is forecast to grow at 4.9% in 2016. The impact of Brexit on Ireland's recovery is not yet clear. Employment now stands at 2.027m (Q3 2016), an employment rate of 65.4%, compared with a low of 1.825m in Q1 2012, an additional 202,000 jobs have been created. The Government deficit was reduced to below 2% in 2015.

Ireland was the fastest growing economy in the EU in 20-14 and 2015. The recovery was initially driven by exports but has now spread across most areas of the economy.  

However, as a small open economy, Ireland can be buffeted by international events. The impact of Brexit on Ireland is not yet known. Already, the farming community has voiced concerns that recent falls in the value of sterling against the EU are damaging agricultural prices. The Taoiseach (Prime Minister) has indicated his key concerns are to minimise the impact of Brexit on travel and trade. Risk mitigation measures are being taken to set of a "rainy day" fund at a level of €1bn annually and to reduce public debt to 45% by the mid 2020s (76% by end 2016).

Gross Domestic Product (GDP)

A table of GDP growth rates in constant market prices is shown below. Economic activity dropped sharply in 2008 and 2009 as Ireland entered into difficult times with the onset of the world financial crisis and subsequent severe slowdown in the property and construction markets. The export sector, dominated by foreign multinationals, remains a key component of Ireland’s economy.  The GDP forecast growth rate for 2016 is 4.2%, and 3.5% for 2017.

The abnormal GDP growth rate in 2015 is due to:

• An increase in the number of new aircraft imports into Ireland for international leasing activities;

• Corporate re-structuring both through imports of individual assets and re-classification of entire balance sheets in 2015, which meant that the level of Capital assets in Ireland increased dramatically compared to 2014.

Employment did not change greatly as a result.

Source Department of Finance Budgetary Statistics 2015

Educational Attainment

There has been a significant improvement in educational attainment mainly due to:

• Falls in the rate of early school leaving (6.9% in 2015);

• Introduction of free second level education in 1967 addressing the legacy of low skills in the older population over time;

• Growth in Further Education and Training since the mid 1980s;

• Dramatic increases in higher education participation rates.

Source OECD Education at a Glance 2015