Hold the Champagne on that Celebration Over Ireland

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Thursday, 14 March 2013 10:59

The Washington Post had an article that touted Ireland's success with its austerity program, which has allowed it to sell long-term bonds in financial markets at reasonable interest rates. The article questions whether Ireland can be an example for the rest of Europe with the first sentence posing the question:

"In Europe’s grand battle over growth vs. austerity, has Ireland proved that austerity works?"

While it is undoubtedly good news that the Irish government can re-enter credit markets, it is worth noting that the unemployment rate in Ireland is still 14.7 percent, down very slightly from its recession peak. This is still 10 full percentage points above the pre-recession level. This is supposed to prove that austerity works?