Independence lessons: How Ireland built a strong economy

Ireland is a stable and prosperous independent country. It has used the powers of independence to build a strong and diverse economy. 

It has long been portrayed as the UK’s poor neighbour but much of that due to the economic exploitation of Ireland by the UK until the early 20th century. 

Ireland enjoys the unique situation of being part of both the Common Travel Zone and the EU single market. It has an educated, dynamic workforce which makes it attractive to investment. All nations have issues and improvement needs, of course they do, but Ireland has used its economic prosperity in ways that mean it now outperforms the UK in most metrics that measure the health and happiness of the population.

Ireland and Scotland are different in many ways - but it is instructive to look at Ireland’s success as a small independent nation. 

Where is Ireland today?

When Ireland joined the EU in 1972, its per capita income was only 60% of the average. Now it is at least 100% of the average and by some measures, it scores even higher. 

Looking at GDP per capita now, Ireland comes third in the world. Economists agree that this figure has been boosted by some multinational companies choosing to register profits in Ireland, (due to Irish Government Policy) but by any measure, Ireland is doing extremely well and is one of the more prosperous countries in the EU. 

Three key lessons

How did Ireland use its independence to catch up with and even overtake the other countries in the British Isles? Here are three of the key ways Ireland built its prosperity that an independent Scotland can learn from. 

1 A greater focus on the wellbeing economy

Ireland has focused on building its economy - but it has done better than the UK at translating that into progress in areas that affect the whole population. Ireland now scores higher than the UK on most of the metrics we can use to judge the health and wellbeing of the whole of society, instead of increasing inequality as has happened in the UK. (Most of these international comparison charts are for sovereign states so they do not list Scotland separately). 

  • Infant mortality is lower in Ireland than in the UK; 
  • Ireland has a lower rate of child poverty than the UK
  • Ireland has a much lower rate of homelessness than the UK
  • Ireland has higher life expectancy than the UK
  • Ireland has a much lower rate of incarceration than the UK
  • Ireland scores higher than the UK on the happiness index

Context

Ireland has levers that Scotland does not have while it remains part of the UK - for example, Ireland has kept its corporation tax low. Since Brexit, being based in Ireland also allows companies to trade in goods and services in Europe while taking advantage of the Common Travel Area with the UK.

Ireland is the European hub for more than 1,000 multinational companies. But it has homegrown talent too - Ireland has six ‘unicorns’ - a privately-held start-up worth more than $1 billion. (Scotland has produced three). 

Ireland has focused on economic growth - but it has paid more attention than the UK to using the fruits of that to foster wellbeing right across society. It has adopted a wellbeing framework which assesses how the country is progressing in metrics from life satisfaction to home insulation. 

2 Investment in Education and Training

Ireland has invested in education and its skilled workforce makes it more attractive to businesses who want to locate and expand there. The country scores highly on international comparisons:

  • Ireland did significantly better than any UK nation in maths, reading and science In the 2022 international comparison table PISA.
  • Ireland ranks several points higher than the UK in the percentage of the population educated to degree level. 
  • Ireland has the highest level of STEM graduates per capita in the EU
  • Ireland’s exceptional workforce earned it second place in the IMD world competitiveness rankings 2023 - compared to the UK’s 29th place.
  • Ireland has one of the youngest populations in Europe with a median age of 35 (Scotland’s is 42, two years older than England’s)

Context

Until the 1970s, Ireland lagged behind other countries both in the UK and most of Europe in terms of access to education. Back then, families had to pay fees to attend secondary school and university or college education was only for a tiny, privileged elite. Since then, Ireland has transformed its education system. 

Ireland now has a child-centred education system, structured in a similar way to Scotland’s Curriculum for Excellence, with a broad-based three-year junior phase in high school followed by a more exam-focused three-year senior phase. Formal school starts at age 6, after two optional years of infant school. 

Ireland is currently undergoing a transformation of its college sector. Ireland has merged several further education colleges to create five Technological Universities. These work together and with industry across Ireland to focus on fostering employability, skills and lifelong learning. 

Scotland has an older population than Ireland. It does not currently control the levers of immigration. The UK government does not allow it to offer a post-study work visa that could retain some of the brightest and best who study here. Now the UK government is threatening to make it harder for international students to come. Scotland is also limited in terms of investment and spending by the UK government’s years of austerity. 

3 Strong links with the EU

There were many in the Brexit lobby who anticipated that Ireland could be forced to fall in line and leave the EU along with the UK. But Ireland is a sovereign state backed by the EU and those bonds have grown even stronger since Brexit. 

Almost every European supermarket today displays premium Irish food products like butter and cheese, but the country’s highest-value exports are actually pharmaceuticals and chemicals. It has a strong balance of payments with the value of exports exceeding imports. 

Ireland was a poor country while it was part of the UK and continued so afterwards. For many years after independence, it was required to pay millions in land annuities to the British government each year. It refused to pay in 1932, sparking an Economic War with the UK which dragged on for years. Despite this, Ireland remained dependent on the UK as its biggest trading partner. 

Ireland was keen to join the single market and welcomed the opportunity to develop its trading relationship with the 27 member states. Now less than 10% of Irish exports go to the UK. The EU is the biggest buyer of Irish goods, followed by the rest of the world.

Ireland has a strategy for increasing the number of its citizens who are employed by the EU. It has just 1% of the EU population but Irish citizens hold almost 2% of jobs in EU institutions. Two of the EU’s 8 director generals have been Irish. Many Irish people take advantage of the freedom to work and study in the EU and many highly educated EU nationals are based in Ireland.

Conclusion

An independent Scotland will be in a position to make its own decisions about Scotlands’ tax and regulatory regimes, and on whether to offer post-study work visas to bright graduates of Scotland’s universities. It will be able to rejoin the EU and increase trade with the block of 27 countries while still being part of the Common Travel Zone, the way Ireland has done.

Scotland can take confidence from seeing how Ireland has managed, even though it had few of Scotland’s economic advantages and was far less naturally wealthy. Independent Ireland is now better off than other UK nations. It has been able to use the powers of independence along with membership of the EU to increase prosperity. That economic success has led to significant improvements in the kind of metrics that we can use to measure health and wellbeing.