Hardships Linger for a Mending Ireland

It certainly looks like Ireland is recovering from near economic collapse. And this weekend Ireland will technically become the first of Europe’s crisis-hit countries to emerge from an international financial rescue program.

But in the suburb of Shankill where Mr. Donovan, 55, lives, the economic hubbub is absent. Many of his neighbors are barely scraping by. He moved into his mother’s small cottage after his hardware supply business buckled during the crisis. With his scant savings eroded, he shoots pigeons for food and grills them outdoors to reduce his gas and grocery bills. “I do that just to live,” he said.

“The Irish people have endured a horrendous time,” Mr. Donovan said. “The government must take their foot off the neck of the nation.”

The Irish government’s severe austerity program was a condition of the 67.5 billion euro, or $92.9 billion, lifeline it received amid a severe banking crisis. But in part because of the sharp cutbacks, Ireland has regained the confidence of investors and will no longer need to rely on the international loans. It can now borrow money in financial markets at low interest rates. But it still must repay most of the loans it has received, which could take decades.

While it has been painful for Ireland’s citizens, it is an achievement European leaders are hailing as a sign that Europe is moving past the worst of a five-year crisis. And with Greece, Portugal and Cyprus still struggling to exit their multibillion-euro bailouts, Ireland is being held up as nothing less than a symbol for recovery.

International investors have been impressed with Ireland’s ability to improve its finances: The interest on its 10-year bond has been reduced to 3.5 percent from 14.5 percent. Newspaper headlines announce hundreds of new jobs weekly, especially in technology. A small revival is even blooming in construction, which imploded when the Celtic Tiger economy went bust.

But the rigor required to get there has been painful. The government cut 30 billion euros in spending, or nearly 20 percent of gross domestic product, one of the largest austerity programs anywhere. New taxes were introduced. Salaries for public employees were cut by around 20 percent, and reductions in unemployment and welfare benefits followed. The bill to bail out Ireland’s banks has amounted to nearly €10,000 per Irish citizen.

“Ireland is the closest thing to a success story that European leaders have,” said Simon Tilford, the chief economist at the Centre for European Reform in London. “But it doesn’t really stand up to scrutiny because there’s been a huge fall in the domestic economy and living standards.”

Martin Brennan earns €9.50 an hour cleaning a hospital near his home in the working-class Dublin suburb of Drimnagh and his wife gets €380 working three days a week in a university administrative job. After buying food and paying bills, there is little money to spare for his family of four. With bailout-linked taxes on property and income, “we have nothing left over,” he said.

Nearly everyone the Brennans know is underwater on their mortgage. Several neighbors were out of work, including a man who was recently fired with 11 others at a family business that collapsed. Martin Brennan shuddered as he talked about how several hospital employees had started going to a soup kitchen for meals. “People are eating cornflakes for dinner,” he said. “Economists say it’s an urban legend. Tell them it’s for real.”

Such hardships may persist well after Ireland exits its bailout. Because financial rigor will still be needed to maintain Ireland’s creditworthiness, Prime Minister Enda Kenny is planning to introduce a further €2.5 billion in spending cuts and new taxes next year.

This article has been revised to reflect the following correction:

Correction: December 12, 2013

An earlier version of this article misstated economic data attributed to the Irish central bank. This year through the third quarter, 18.5 percent of homeowners had missed a mortgage payment; it is not the case that two-thirds of homeowners have not paid their mortgage on time for the last two years.