More Setbacks for Irish Economy

The nationalization of Anglo Irish Bank is the latest blow for the Celtic Tiger. A dismal job market is even forcing people to consider emigrating

By David McKittrick

It was one of the Celtic Tiger's most aggressive cubs: a bank that cut a buccaneering swathe across the financial world, becoming a by-word for the dynamic, economically savvy modern Ireland.

A year ago, Anglo Irish Bank (ANGL.I) was worth €7bn (£6.3bn) but by yesterday, it was worth just €160m. Its chairman, Sean Fitzpatrick, has resigned in disgrace and the bank has been nationalised. It has literally gone from boom to almost bust.

Today, the big fear in Dublin is that the country is in such deep trouble that it too may wind up pretty well broke. Ireland is not yet on its knees, but recession has it in its grip. There is an economic and banking crisis and the housing market has come to a shuddering halt. Savage cuts are in prospect. Emigration is back.

The powerful growl of the once vigorous Tiger has gone, reduced to an anxious whimper as the Republic comes to terms with the uncomfortable but unmistakeable fact that its glory days are over. The most prosperous era in Ireland's history is at an end, its departure all the more keenly felt because of all the years of affluence. It was the best of times, but now some of the worst of times may lie ahead.

Dermot, a clerk working in Cork, reflected the views of many when he said yesterday: "I hope I'll be insulated from it myself because my house is paid for. With a bit of luck my job and my wife's job will last.

"But our children are still at school, and it will certainly be very, very tough for young people who've never known anything only to party. Because they'll have to live with the hangover."

He said that with a rueful chuckle, but he and millions of Irish people are sombre as they contemplate the end of the era of plenty. And the message from the government is that the hard times are only just beginning.

Prime Minister Brian Cowen cautions that 2009 will bring "pain and casualties" while the Finance Minister, Brian Lenihan, says that ahead lie "decisions which even a few months ago seemed unthinkable".

The government is now expected to target the public sector, whose workers are regarded as enjoying high wages and high pensions. One female employee said: "Everybody is holding their breath to see what happens – there's a real sense that the axe is about to start swinging, though nobody is sure what the extent of it will be."

Across on the west coast, the disappearance of a "Loadsamoney" culture is outlined by Declan Varley, the editor of the Galway Advertiser. "It's very noticeable in the bookies' shops," he said. "A lot of the young men working on building sites, getting very well paid, used to come in and slap hundreds or even thousands of euros on things like an Arsenal match. They don't do that any more – now it's back to the grey old men who were there before, sitting round and betting a few pounds. It's very obvious that the money has gone."

Ireland is today beset with many of the same problems affecting Britain, complete with the banking controversies and the other features of the global turndown. But the building industry has brought an extra dimension to Ireland's woes. Critics say the government made things worse, over the last decade and more, by placing too many bets on construction.

The building trade was for years a roaring success: tens of thousands of new houses and apartments went up, along with scores of new hotels and extravagant shopping malls. Practically every town and village in the Republic gained new housing estates on their outskirts, providing a very obvious illustration of the country's new-found affluence. The boom changed the face of Ireland.

It also brought remarkable alterations in social habits. Dublin, once seen as an easy-going city with a reputation for excessive drinking, developed much more of a work ethos during the years of the Tiger. Hundreds of pubs closed down in the capital and across the country as the culture changed. Longer working hours came in, while the rapid increase in Dublin housing prices created a ring of commuter towns. But the housing bubble has burst.