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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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  • FitzGerald, John

    (Trinity College, Dublin)

  • Kenny, Seán

    (Department of Economic History, 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

  • FitzGerald, John & Kenny, Seán, 2017. "'Till Debt Do Us Part': Financial Implications of the Divorce of the Irish Free State from the UK, 1922-6," Lund Papers in Economic History 166, Lund University, Department of Economic History.
    • Handle: RePEc:hhs:luekhi:0166
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    2. Carmen M. Reinhart & Vincent R. Reinhart & Kenneth S. Rogoff, 2012. "Public Debt Overhangs: Advanced-Economy Episodes since 1800," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 69-86, Summer.
    3. Crafts,Nicholas & Toniolo,Gianni (ed.), 1996. "Economic Growth in Europe since 1945," Cambridge Books, Cambridge University Press, number 9780521499644, September.
    4. Kevin H. O'Rourke & Cormac Ó Gráda, 1995. "Irish economic growth," Open Access publications 10197/419, School of Economics, University College Dublin.
    5. 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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    Cited by:

    1. FitzGerald, John & Kenny, Seán, 2018. "Managing a Century of Debt," Lund Papers in Economic History 171, Lund University, Department of Economic History.

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    More about this item

    Keywords

    contingent liability; public debt; secession; independence; Ireland; United Kingdom; Financial Agreement; political economy; border;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • 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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