By taking decisions today that lead to fiscal consolidation over a longer horizon, policymakers can avoid a sudden fiscal contraction that could put the recovery at risk.
Without these burdens, it is plausible that Ireland would have done at least as well as the euro area’s lack-lustre post-2008 performance. If so, by 2013, living standards would have been about 15 per cent above their actual level, and employment about 8 per cent higher.