Thanks to cheap credit, and rapidly rising property prices, Ireland experienced a property bubble between 2000 and 2007. This bubble led to such a radical distortion of its economic structures, and to such an increase in debt, that full recovery will take 20 years.
The revenue of the Government became unhealthily dependent on property sales such as stamp duty, capital gains tax, and VAT on house sales. Property related revenues reached 18% of all revenues in 2006, whereas they were only been 8% in 2002.
The authors identify two tendencies of Irish policy making, whether in the public or private sector, that were fatal
1. “Silo tendencies” within institutions, where people only think about their own immediate responsibilities, and do not question wider assumptions.
2. A “consensus approach” which encourages a single view to be taken of any issue.
The really blame worthy mistakes were made between 2000 and 2006, when huge and unsustainable increases in bank lending, and government spending, were allowed to take place.