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.
Notes on the Front 
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