Irish exit into the unknown

Ireland is being held up once more as the star pupil of the austerity school of economics in Europe, with the Taoiseach [prime minister] Enda Kenny arguing that his government is exiting the bailout programme set by the troika of European Union, the European Central Bank and the IMF. He says the era of austerity is coming to an end.

Both of these claims are clearly questionable, but they do illuminate some important features of the situation in Europe.

The policy of the Dublin government will continue to be set by the troika for many years to come. In fact the EU has already put in place a system of budget monitoring, regulation and even sanctions that will enshrine permanent austerity for all members of the euro.

In addition, it has become customary for the IMF to put in place a new credit facility once initial bailout money runs dry which has its own strings attached. Therefore it is untrue that austerity is at an end. Instead, the assets and loans held by Irish banks have become so devalued as a result of economic weakness that the risk of a new bailout for their creditors is rising.