Ireland is on its way back, and it wants the world to know it.
Recovery for the country that sought an international bailout in November of 2010 has not been without its bumps and bruises along the way, however, and setbacks are still surfacing. However, the picture is much brighter than it was after the global financial crisis brought the Celtic Tiger to its knees.
The release of asset review tests by Ireland’s Central Bank brought mixed news at the beginning of December, but the country that had to seek a bailout of 67.5 billion euros ($91 billion) from the “troika” of the International Monetary Fund, the European Central Bank and the European Union not so very long ago is set to exit that bailout in mid-month, and it plans on doing so without a safety net. The country has not sought a prearranged credit line as a backstop for its reentry into capital markets, banking (literally) on being able to fight its own way clear of remaining money troubles by the sale of bonds on international markets.
The Irish government pointed to the proceeds of recent bond sales as reserves that it can call upon if necessary to meet upcoming payments and funding costs till 2015. Securing a credit line would have meant surrendering to additional conditions, something the country was not anxious to do, particularly after the hardships it has endured during the austerity program demanded as one of the conditions of its bailout.
As a display of confidence in its own ability to grow its way out of the problem, it’s a grand one. Prime Minister Enda Kenny told the Irish Parliament, “This is the right decision for Ireland, and now is the right time to take this decision. This is the latest in a series of steps to return Ireland to normal economic, budgetary and funding conditions.” And Ireland has certainly performed the best of the four bailed-out countries; its partners in misery have been Greece, Spain and Portugal.
But it remains to be seen how successful Ireland will be, with the eurozone’s economy still floundering, Germany’s slowing, and problems continuing within its own borders. Bank of Ireland is in talks with the country’s Central Bank over the results of its asset review test, which the latter says shows the former coming up several hundred million euros short on required capitalization reserves. Still, the test is seen as a precursor to stress tests to come later for eurozone banks, and possibly that has contributed to a more harsh assessment than would otherwise be made.
Along with persisting problems, there are definite signs of progress on the Emerald Isle, however. On the one hand, employment is still taking some hits, as global drug company MSD (formerly Merck Sharp & Dohme) announced another round of layoffs, planning to shutter its women’s healthcare product business in Swords by the end of 2017 and throwing as many as 570 people out of work in the process—this atop a previously announced layoff of 280 with the closure of its Rathdrum plant in County Wicklow. And A|Wwear, a fashion retailer, has gone into receivership after failed restructuring attempts; that will result in closure of at least some of its 31 Irish and nine U.K. facilities.
But on the other, employment is up by more than 3% year over year for Q3, according to Michael Noonan, minister for finance, who also said at a banking conference that property prices were finally on the rise as well and, although levels were still high, household debt was finally beginning to drop.
Also on the positive side, Microsoft is expanding in Dublin, bringing in 380 jobs for construction as it grows the Clondalkin facility, a Europe, Middle East and Africa data center. The expansion will also mean 20 new jobs for the team in Clondalkin, but more optimistically, Tanaiste and Foreign Affairs Minister Eamon Gilmore is banking on the action to move Ireland further along the road to becoming a cloud center of excellence and the country of choice for data center investments.
Even the climate favors such a development, since Dublin’s cool temperatures keep the energy required by data centers low. That, together with the country’s focus on renewable energy, has made Dublin a hub for other IT companies than Microsoft, as Google and Amazon have also located cloud centers there. Facebook and Yahoo have also announced plans to expand in the area.
Another plus is wind energy group Gaelectric’s receipt of funding to build a new windfarm at Dunbeg in County Kerry. The company and its wind farms have drawn investments not only from BlueBay Ireland Corporate Credit, the BlueBay Asset Management Fund backed by the National Pensions Reserve Fund, but also Nord/LB, the German Landesbank and Swedish corporate finance house Proventus Capital.
But Ireland is not sitting idly by and waiting for things to improve; it’s also launching some initiatives of its own. Among them is a tourism blitz building on its successful 2013 campaign “Jump Into Ireland,” which brought a record 1.1 million visitors from North America alone, saw overall visitor numbers rise by 7.2% to 8 million, and boosted tourist spending 6% to 3.64 billion euros. The new campaign, the “Wild Atlantic Way,” is being promoted in, among other countries, Germany, France and China, as well as Australia, and has set targets of a 4% visitor increase and an 8% increase in revenue for next year. Tourism companies are both determined and optimistic.
Less conventional, but possibly more promising in the long term, is Trinity College Dublin’s strategy for innovation and entrepreneurship. Trinity plans to launch a “creative quarter” aimed at overseeing the launch of more than 160 startups by 2016 arising out of the university community. Aided by a 70-million-euro building program that will establish an area that encompasses Pearse Street and the Grand Canal Basin in Dublin, and a new 70-million-euro Trinity School of Business, the program is designed to foster collaboration between academia and enterprise. With such a partnership being nurtured, businesses and investment are sure to follow.