The Celtic Tiger boom and the 2008–2010 banking collapse

Ireland's gross national product nearly quadrupled between 1990 and 2007, with annual GDP growth regularly exceeding 8 percent from 1995 to 2000 as export-led foreign direct investment gave way, after 2000, to a credit-fuelled construction boom; unemployment fell from almost 17 percent in 1987 to roughly 4 percent by the turn of the millennium. That same credit expansion left Irish banks dangerously over-exposed to property lending, and when global funding markets froze in 2008 the government issued a blanket bank guarantee that September. Patrick Honohan, who became Central Bank of Ireland governor in 2009, later concluded that bank directors had committed a 'comprehensive failure' to maintain safe lending practices, and that the guarantee, while costly, averted losses that would have run tens of billions higher. Unable to refinance itself, the state entered an EU-IMF programme in November 2010 worth roughly 85 billion euro, about 40 percent of GDP, split between bank recapitalisation and public financing, marking the sharpest reversal of the Celtic Tiger era.