There is a long running joke that tells us the only difference between Ireland and Iceland is one letter and six months.
Well, judging from two headlines in last Saturday’s Irish Times there is now a significant difference between the two countries.
Here are the headlines with some quotes from each article.
At the end of May, the banks’ total borrowings from the Central Bank in Ireland and the ECB stood at €156 billion, down from €160 billion in April.
The gradual loss of deposits at the Irish banks over the past year has led to a surge in borrowing from the ECB which reached a peak last November, when banks here were in receipt of €136.4 billion in funding.
The dramatic rise in Irish financial institutions’ dependence on ECB funding, at a time when other countries were reducing their reliance, is believed to have been one of the key triggers behind the IMF-EU bailout.
Iceland returned to international debt markets for the first time since its banking meltdown more than two years ago as investors offered to buy twice the amount the government offered in dollar-denominated bonds.
Iceland, which averted a sovereign default by refusing to bail out bondholders when its banks failed in October 2008, will enjoy economic growth of 2.2 per cent this year and 2.9 per cent in 2012 as its budget deficit narrows to 1.4 per cent of gross domestic product, according to the Organisation for Economic Co-operation and Development.
The island’s approach to resurrecting itself from financial ruin has won the praise of Nobel laureate Paul Krugman, who says Iceland is now better off than euro member Ireland.