Graham Donnelly’s carefully reconstructed life has become like Ireland itself, a story of prosperity found then lost, of a crash and burn and a successful struggle to get back on his feet. But he is also a symbol of the tough road ahead for Europe .
When Ireland flourished in the 2000s, so did Donnelly, landing a well-paying job in pharmaceutical research that covered a life of expensive dinners and overseas travel. That ended in 2009 as the debt-fueled economy here crumbled and Donnelly was laid off. He spent the next three years making ends meet with short-term work and unemployment checks — until November, when the 38-year-old finally landed a new job at the Irish operations of Pfizer, the U.S.-based pharmaceutical giant.
For optimists, Donnelly’s rebound is a sign of long-awaited better times in Ireland and across Europe. Yet dig deeper, and nothing in Europe — including the spring in the step of Ireland’s economy — is as good as it seems.
What is emerging instead for the Irish and millions of other Europeans is a recognition that the toll left by four years of debt crisis has been far worse and the recovery more fragile than what Americans have endured since 2008 because of the U.S. financial crisis.
The economic landscape across the continent remains grim — so grim that some wonder whether a true recovery is taking root at all. On Tuesday, highly inconclusive results from Italy’s general elections rekindled fears of more debt woes in Europe, slamming stock and bond markets and affecting global commodity markets. Last week, the European Commission conceded that the 17 nations of the euro zone were heading for another year of recession in 2013, forecasting a contraction of 0.3 percent.
To be sure, Ireland is being held up as the leading light of a nascent recovery, a model for other hard-hit nations such as Greece, Portugal and Spain. The Irish economy is growing again. Housing prices and the unemployment rate are stabilizing, and Ireland is on track to become the first country in Europe to emerge during this crisis from an international bailout program.
Even so, Irish unemployment remains above 14 percent, and economists say that number would still be climbing were it not for an estimated 1,600 Irish workers a week leaving to find work overseas.
Those such as Donnelly who have landed new jobs face uncertainty. Although his new position is the best he has found in years, he was hired only on a one-year contract that — like so many of the new jobs being created here — offers no guarantee of permanent work. His new position, doing quality control on drugs, is also grades below his education and experience level. In terms of his income, Donnelly is roughly back where he was shortly after finishing his doctorate in 2005 and significantly below his salary peak in 2009.
“We’re having to live differently, to adjust to a different reality, to different expectations in life,” Donnelly said. “You just focus on trying to make sure things don’t get worse.”
In fact, more common than Donnelly’s are stories like that of Fran Whelan, a construction contractor whose business went bust during the crisis. He is attempting to put himself through business school at 43.
To support his family of five, Whelan is grabbing spot work as a manual laborer when he can get it — work he thought he had left behind in his youth. He is actually encouraging his children to join the exodus of young workers from Ireland, recognizing, he said, that there is little left for them here now and that there may not be for some time.
“I know some people have managed to stabilize, but most of us are still falling, and we don’t know how deep we’ll end up,” he said. “Recovery? What recovery? We just don’t see it.”
Ireland, where a U.S.-style construction boom fueled growth and sent property values soaring in the 2000s, had a long way to fall when the global credit bubble began to burst nearly five years ago. By March 2007, the economy here had hit a blistering 5.5 percent growth rate — he highest ever recorded in this island nation of 4.5 million.
But by 2008, Ireland had fallen into a deep recession. Massive bank bailouts crippled the national finances, souring Ireland with investors and making it impossible for the government to borrow enough money to operate. By 2010, a humbled Ireland had requested an international bailout.
Now the economy is growing again, albeit weakly. This month, Ireland reached a key deal to reduce short-term debt by liquidating the nationalized and broken Anglo Irish Bank. That has added to hopes that Ireland, if the economy holds up, can break free of its rescue program from the International Monetary Fund and the European Union bailout and return to the bond markets by year’s end.
But what is really happening, many argue, is more a bottoming out of the crisis than a genuine recovery — with the chances of a fall back into recession an ever-present threat. And even as conditions improve, the country is facing new challenges.
Wages, for instance, have fallen by almost 15 percent since the crisis began — something economists say was essential in a nation where an overly high cost structure was making it globally uncompetitive. At the same time, though, the value of the euro — a currency shared by 17 nations — is bouncing back, making everything from Irish pharmaceuticals to Irish whiskey suddenly more expensive on global markets, eroding some of Ireland’s hard-fought gains.
“This isn’t going to be an easy recovery, not one big bounce back,” said Constantin Gurdgiev, an economist at Trinity College in Dublin. “This is going to be ugly.”
There are still many fuses that could reignite the crisis, including in the housing sector. For instance, to save on expenses, Donnelly has moved in with his sister, who owes roughly $80,000 more than her home is worth.
She is not alone. Tens of thousands of Irish homeowners are still underwater in a country where home prices have fallen by almost 50 percent and banks have been slow to address arrears. Thus, economists say, a potential new wave of home foreclosures across Ireland remains a substantial risk, just as it does in other hard-hit European nations, including Spain.
Donnelly’s new job also speaks to how hard it may be for other countries in Europe to mirror Ireland’s trajectory out of recession. He found work among the multinational companies that are growing in Ireland in part because of its extremely low corporate tax rate, giving this nation a boost that could be replicated only if other countries in Europe begin engaging in a bruising brawl over who charges foreign firms the least to do business there.
While foreign firms, including Google and PayPal, are indeed a rare light in the economic landscape here, they employ only about one in every 10 Irish workers. And while their profits are captured in Irish economic data, much of their cash is simply being funneled overseas and not being spent or kept here.
But for people such as Donnelly, things nevertheless seem less grim than they did only a few months ago. A fan of fashion, Donnelly would go months without buying new clothes when unemployed. Now, his financial confidence — and disposable income — has bounced back to the point where he recently splurged on a $200 sweater by a Japanese designer.
But even by that barometer, things are anything but back to normal. Years ago, he would waltz into the elegant Brown Thomas department store in central Dublin to pick out his clothes amid the well-dressed clerks and chic displays. Now, he limits himself to bargain hunting on the Internet.
“We wanted our slice of the good times in Ireland, and we’ve all paid the price,” he said. “Things don’t seem as dark at they did, but we’re not where we used to be. Who knows if we’ll ever get back there.”