Ten years on, how countries that crashed are faring

A decade of austerity has had a lasting legacy for eurozone members Ireland, Portugal, Greece and Spain

Ireland
Three years after it was saved from bankruptcy in 2010 with a €67.5bn rescue loan, Ireland became the first stricken eurozone state to stand on its own two feet.

Dramatic austerity measures, including steep cuts to many public sector workers’ pay, had satisfied the European Union, the European Central Bank and the International Monetary Fund that their loans would be safely paid back.

A dearth of housebuilding over the past 10 years, despite rising household incomes and a sharp increase in employment (from 1.8 million in 2012 to well over 2.1 million last year), has also sent rents soaring, leaving many young workers to miss out on the recovery.

Meanwhile homelessness remains a major problem across the country. And in some areas negative equity and mortgage arrears mean the scars of recession remain. More than 8% of the population live in consistent poverty and 7% of mortgages are still more than three months in arrears.

Portugal
Lisbon followed the post-crash route charted by the UK and Ireland of punishing austerity before voters in 2015 ditched the rightwing government led by Pedro Passos Coelho in favour of the socialist leader António Costa. Since then, austerity has eased, consumer and business confidence has recovered and GDP growth has stayed above 2%.

Costa recently told the European parliament that, thanks to his government’s alternative economic approach, Portuguese people, in contrast to many European countries, had regained their “trust in the democratic institutions and in their belief in the EU”.

He reeled off a list of economic achievements, including reduced inequality, increasing employment and a budget deficit well within EU rules. Last year the European commision released Portugal from its bailout conditions.Ireland

Greece
The collapse of the rightwing New Democracy government amid riots and strikes in 2015 ushered in the radical leftist government of Alexis Tsipras, who agreed a bailout with the EU of €86bn. It was the third time Greece had almost gone bust since 2010, when the Greek debt crisis started and the country received €110bn in bailout money before Brussels agreed a further €130bn in 2012.

After almost 10 years of eye-watering austerity, in which taxes have risen, welfare subsidies have been cut, pensions reduced and thousands of public sector workers made redundant, the government is poised to agree the final tranche of loans from the EU before being set free in August. But there are few economists who believe a country with a debt-to-GDP ratio of 180% can generate the funds needed to invest in the economy and pay back the loans.

Spain
Madrid avoided a comprehensive bailout, but the collapse of its banking system meant that in the crisis months of 2012, when Greece and Ireland were on the brink, Mariano Rajoy’s rightwing government agreed to borrow €100bn from Brussels.

Rajoy was under pressure after the giant banking group Bankia had asked for a €19bn state rescue, and international investors effectively locked Spain out of the financial markets.

Like Ireland, Spain has recovered strongly since then. GDP growth between 2015 and 2017 averaged 3.2% as employment climbed and household incomes recovered.

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