| Ireland |
Back to the futureWith their domestic market the first within the eurozone to fall into recession, Irish law firms have had a baptismof fire in banking crisis management. Legal Business reports on what trends their UK rivals can expect to encounter. By Maria Jackson  Ireland’s commitment to the European Union may seem questionable following its rejection of the Lisbon Treaty in June 2008, but its current economic distress has confirmed that the country is utterly embedded in Europe, whether it likes it or not. The global turndown acted as a catalyst to the much-heralded collapse of Ireland’s construction bubble, which at its peak represented one-fifth of Ireland’s total economy. The property crash led the country into recession for the first time in 25 years in the second quarter of 2008. The fact that its boom was so huge – gross debt fell from 109% of GDP in 1987 to 25% of GDP in 2007 – suggests that its bust is going to be similarly dramatic. ‘Fifteen percent of European Central Bank (ECB) emergency liquidity has been taken up by Irish-based banks,’ says Ambrose Loughlin, banking and finance partner at McCann FitzGerald. ‘Ireland represents only 1% of the population of the EU.’ It is a statistic that throws the extent of Ireland’s recession (and its dependence on Europe) sharply into focus. But it also shows just how reactive the Irish government has been. The country has embarked upon a path of decisive political action to try to reduce financial instability following the onset of the credit crunch. Ireland was the first EU state to guarantee bank deposits and it has recently become the first European country to lay plans for a ‘bad bank’ scenario.To read the rest of this article subscribe to Legal Business. 
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