'Irish Brexit' works out after a century

Dublin marks 100 years of independence on December 6, capping a 'year of centenaries'

William T Cosgrave, president of the Irish Free State, centre, attends a meeting with his cabinet in October 1922. Getty Images

It could be said that Ireland carried out its own Brexit when it gained its freedom through the creation of the Irish Free State in 1922.

When the country set off on its own economic path the journey proved no less tortuous than the current travails of Britain having left the European Union.

Headlines at the time were muted in light of the civil war that was raging following the British withdrawal.

“No fanfare or celebrations as Irish Free State is born,” said one headline on the foundation of the Free State. “The occasion attracted only a small crowd outside [parliament], where a magnificent new tricolour flag, specially made, flew in the breeze.”

On Tuesday, Dublin will mark 100 years of independence, putting a cap on the island’s “year of centenaries”.

In the week leading up to the commemoration of the establishment of the Irish Free State, the country has been tuning into a TV documentary focused on the downfall of one of its most notorious businessmen.

Quinn Country is a blockbuster examination of the rise and fall of Sean Quinn, who made his name in the concrete and construction business before moving into insurance but his dreams were scuppered in 2008 by debt-laden investments in a now bust bank Anglo-Irish.

It is fitting that an economic boom-to-bust tale is currently the biggest hit on national TV — Ireland may be too small to be an economic model for the world but it has been a trailblazer in showing how independent, export-led countries can slump, recover and grow to thrive.

The first leaders of the Free State — a name that denoted the compromise between the Irish drive for a republic and the UK’s demands — were obsessed with the fear that the project would collapse in chaos.

William T Cosgrave, head of the new executive council, described December 6 as a “notable day when our country has definitely emerged from the bondage under which she has lived through a week of centuries”.

Historian Maurice Walsh, author of Bitter Freedom: Ireland in a Revolutionary World 1918-23, says Cosgrave and his colleagues were haunted by the thought the Irish would be seen as “as a people unable to govern themselves”.

“Indeed, there were already hints that the chaos of the civil war could lead to Ireland being regarded as a failed state, spiralling into such a calamitous state of collapse that Britain might even be able to justify reoccupation to restore order,” Mr Walsh wrote.

“In October 1922, a British journal remarked that ‘Ireland’s failure strengthens the cause of those who believe in strong imperial government rather than democracy.”

Today Ireland is as rich, or richer, than the UK by many yardsticks while a century ago the British economy was 88 per cent wealthier. The average household net worth in the UK was £172,000 in 2022 while the Irish figure was £165,980.

The OCED real household consumer spending index over the past 15 years now pegs Ireland at 112.46 while the UK is at 106.79.

A few months before the creation of the Free State, James Joyce published Ulysses, the novel that became the ultimate Irish book.

Critic Tom McCarthy points to the constant entrepreneurial scheming by its protagonist Leopold Bloom. The novel also describes England as the land of monetary self-sufficiency, whereas Ireland was a pawnshop economy always scraping to get by.

“The logic of accountancy has permeated the prose [of Ulysses],” writes Mr McCarthy.

The first government of the Free State was described as “the most conservative revolutionaries that ever put through a successful revolution”.

In 1924, it rammed through a 10 per cent cut in pensions to balance the books. Meanwhile, the republicans who took over in 1932 launched an economic war with the UK that triggered mass emigration and a self-reliant poverty that lasted through the 1950s.

Economist Kevin O’Rourke summed up the mantra as “Burn Everything British but Their Coal”.

Things improved in the 1960s until the boom-bust of the 1970s triggered another lost decade or more.

“Twice, in the 1950s and the 1980s, the case for the Republic of Ireland being considered a failed economic entity was a strong one,” said Mr O’Rourke and Cormac O Grada in another paper.

“The impact of a postcolonial, but self-imposed, trade dispute in the 1930s and semi-autarky imposed by the Second World War were severe, while that of the financial crisis of 2008 was more damaging in Ireland than anywhere else in Europe, Greece excepted.

“The impact of these five crises — four of them mainly or wholly self-inflicted — on economic activity and on emigration, long a sensitive marker of Irish economic malaise.”

But joining the EU offered a significant boost for the country. Speaking this week, Irish Prime Minister Micheal Martin said EU membership has been of inestimable benefit to the economy.

“Over the last 50 years, sharing our sovereignty with our European partners has helped to make us all safer, stronger and more prosperous.

“Ireland’s membership of this union has had an overwhelmingly positive impact across all dimensions of our society.

“For our part, Ireland has been proud to contribute strongly to the shaping of today’s European Union which we have come to see as our home.”

Economist David McWilliams says that Ireland’s ability to attract US investment both in the shape of large social media companies and exporting companies such as pharmaceuticals allows it to boost growth and benefit from being a globally open economy.

“Although Ireland might be aiming to become more European, we are doing so with American money,” he wrote earlier this year. “The Irish strategy can be summed up as talking European, walking American, sounding Irish.”

The Free State’s great failure was that Northern Ireland counties decided to stay in the UK.

There, too, the relative strength of the Dublin side of the border has been increasingly evident.

“Productivity in the two regions was broadly equivalent in 2000,” a report from Mr Martin’s government said this week. “By 2020, productivity per worker was approximately 40 per cent higher in Ireland compared to Northern Ireland.”

It said one of the key differences was that only two in five northern schoolchildren gained second- or third-level qualifications while 60 per cent in the Republic gained higher education.

“Our analysis points to the need to rapidly improve skills in Northern Ireland, particularly at the postsecondary level,” the report said.

Mr McWilliams, fresh from a recent bus trip from the Republic through Northern Ireland, also cited a different attitude to infrastructure and other public investment.

“You get to [Northern Ireland] and you then go back to the 1970s,” he said on his eponymous podcast last month.

“It's extraordinary. It's a time warp. What is happened is they have frozen spending on infrastructure where we have spent a huge amount.”