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‘Till Debt Do Us Part’:Financial Implications of the Divorce of the Irish Free State from the UK, 1922-6

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  • John Fitzgerald

    () (Department of Economics, Trinity College Dublin)

  • Seán Kenny

    () (Lund University)

Abstract

In this paper, we discuss the unresolved apportionment of national debt when Ireland exited the UK in 1922. Using archival sources and contemporary accounts, we estimate that the British claim on Ireland in 1925 amounted to between 80 and 100 per cent of GNP at a time when the political stability of Ireland was already fragile. We describe the process of how this contingent liability, arising from the Anglo-Irish Treaty of 1921, was ultimately waived in a Financial Agreement in 1925 at the expense of an unchanged border with Northern Ireland. The Irish government also sought, but failed, to secure protection against discrimination for Catholics in Northern Ireland as part of the agreement. While for the Irish Government, this settlement may have represented a political failure, the economic outcome of the agreement transformed the economic position of the new Irish State from one of potential insolvency into one of viability.

Suggested Citation

  • John Fitzgerald & Seán Kenny, 2017. "‘Till Debt Do Us Part’:Financial Implications of the Divorce of the Irish Free State from the UK, 1922-6," Trinity Economics Papers tep2117, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduee:tep2117
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    References listed on IDEAS

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    1. Nicholas Crafts, 2016. "Reducing High Public Debt Ratios: Lessons from UK Experience," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 201-223, June.
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    Keywords

    Contingent liability; public debt; secession; independence; Ireland; United Kingdom; Financial Agreement; political economy; border.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • N00 - Economic History - - General - - - General

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