Ireland has been repeatedly touted as a success story by advocates of austerity. However as Floyd Norris points out in a nice piece today, the widely touted turnaround is mostly a quirk in the data.

For tax purposes, several large UK companies have moved their headquarters from the UK to Ireland. This changes nothing in terms of Ireland's actual GNP, in the sense of money flowing to people living in Ireland, but it does lead to an increase in reported GNP. The profits of these UK companies now show up in Ireland's GNP rather than in the UK. When an adjustment is made for this switch Ireland's GNP growth looks considerably weaker the last four years. Instead of turning positive in 2010 its current account just turned positive last year, and even then just by a small amount.

It seems like the austerity advocates will have to look elsewhere for their success story.