In his farewell address, Leo Varadkar emphasised Ireland’s transformation from being plagued by unemployment to enjoying full employment and from grappling with budget deficits to attaining budget surpluses, indicating what he believes to be his prime accomplishments. His economic victories are prioritised over his political ones, thereby shaping his legacy.
However, the credit a political figure can claim for full employment, hinging largely on significant US investments, and for a budget surplus fueled by an unprecedented amount of corporate tax revenue from the same companies, remains debatable. Despite this, the stable political, pro-business, low-tax atmosphere was nonetheless a crucial component, steered by the ruling government.
Back in 2012, Ireland experienced its worst recession period, where unemployment soared to a shocking 16% and the country’s finances were managed by global creditors through a bailout scheme. The notion of transitioning to full employment and maintaining budget surpluses seemed inconceivable.
In 2018, a year subsequent to his appointment as Taoiseach, Varadkar oversaw the country’s first surplus in 10 years. Insiders claim this reflects not only the recovery of public finances from the crisis but also the emergence of new financial propriety. Critics, however, contend that given the massive corporate tax windfall, the government had little option but to act such and deviating from this path would have been financially imprudent.
Regardless of criticism, this preparation paved the way for the favourable financial responses to both the pandemic and recent living-cost crisis. Ireland’s handling of these emergencies and the resilience exhibited by the economy can best be evaluated by the record employment of 2.71 million people.
Conversely, the rapid recovery since 2012 has also led to different challenges – infrastructure saturation. A grim lack of investment in amenities like schools, hospitals, and notably housing has created innumerable obstacles for the country’s citizens.
The issue of housing has become a pressing concern for US companies operating in Ireland, with almost half of the American Chamber of Commerce Ireland (AmCham) members indicating that it is the main obstacle ahead of further investment and expansion in Ireland. This has been revealed by a recent survey conducted by the chamber.
The political implications of the housing crisis have been noteworthy. They led to the demolition of the long-standing two-party system and thrust Fine Gael and Fianna Fáil into an extensive coalition. Additionally, they pushed Sinn Féin to the cusp of authority, an unfortunate circumstance presided over by Varadkar.
Remembered for his famous vow to represent people who rise early, made during his fight with Simon Coveney for party leadership in 2017, Varadkar laid emphasis on personal taxation. Particularly, he focused on the attempts to lessen the hefty tax pressure on middle-class earners. Notably, there has been an increase in the entry point for the higher 40% rate of income tax for single earners through consecutive budgets, moving from €33,800 in 2017 to €42,000 this year. Critics argue that these higher limits merely counterbalance the feared fiscal drag, or increased taxes that naturally come with rising incomes. Yet it’s unclear if other leaders would show the same degree of concern for the middle-class strain.
Varadkar is recognised for his efforts to establish the Land Development Agency (LDA), the government’s primary instrument to create affordable housing, and the launch of high-speed internet. While it may take longer to evaluate these as successful interventions, they remain key aspects of his leadership.
In summary, Varadkar’s economic legacy reflects the Irish economy’s dual nature – progressing rapidly in some sectors, while straining in others.