Scandinavian Working Papers in Economics

Lund Papers in Economic History,
Lund University, Department of Economic History

No 166: 'Till Debt Do Us Part': Financial Implications of the Divorce of the Irish Free State from the UK, 1922-6

John FitzGerald and Seán Kenny ()
Additional contact information
John FitzGerald: Trinity College, Dublin
Seán Kenny: Department of Economic History, Lund University, Postal: Department of Economic History, Lund University, Box 7083, S-220 07 Lund, Sweden

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.

Keywords: contingent liability; public debt; secession; independence; Ireland; United Kingdom; Financial Agreement; political economy; border

JEL-codes: E62; F50; H60; H77; N00

34 pages, December 1, 2017

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