More Setbacks for Irish Economy

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Sales are few and many who mortgaged to the hilt are heading for negative equity: among the hardest hit are those now out of work and struggling to keep up payments. "We have a new layer of clients coming in," said Grainne Griffen, who staffs a citizens' information centre in Dublin's Liberties district. "They'd generally be younger couples, a lot of the time couples with children.

"Many would have bought houses on dual incomes, then one of them has lost their job and they're unable to meet mortgage repayments. A lot have been put on short time as well. The dole offices are completely overworked now, there's an awful lot of pressure on the system."

The building trade was one of the key drivers of the Tiger but now it is practically moribund. The grim forecast of Dublin academic Morgan Kelly is that "construction of residential and commercial property will fall to zero for the foreseeable future."

This view is supported by Fergus Whelan, a construction trade unionist: "About two years ago we were building nearly 90,000 houses a year, but I don't know if there will be any built this year.

"We went almost overnight from loads of activity to almost none. There are sites where there are houses largely built but no finishing touches are being put to them, there's just basically a lock on the gate." One curiosity is that the architecture profession has taken some of the heaviest hits, and took them early, with 30 per cent of architects made redundant and more set to follow. No new building means no work. In recent years Ireland took in many migrants from eastern Europe, particularly Poland, but now many are heading back home. Young Irish people are also on the move.

Grainne Griffen said: "You see a lot of people who've lost their jobs going to Australia – especially tradespeople because they can get a visa."

Fergus Whelan agrees, saying: "The old safety valve used to be to go to England, but there's no point in going there now."

The same pattern holds in the west, said Declan Varley. "The young people are not going to the standard places like America and the UK, they head for Australia, New Zealand, Asia. They're seeing it a bit like an extended holiday – the idea is to go and see the world and come back when things are good again."

The picture is not uniformly black. The west of Ireland for example suffered a severe blow when the computer firm Dell announced this month that 1,900 jobs would be moved from Limerick to Poland. But so far, at least the western cluster of high-tech American electronic and biomedical companies seems relatively secure, and the local hope is that they will survive.

One big difference between Britain and Ireland in these trying times is the drastic drop in approval for the government. While opinion is divided on how well or how badly Gordon Brown has performed, faith in the Dublin government is at an all-time low. Brian Cowen has been Prime Minister for less than a year, but a mixture of poor judgement and bad luck means his administration has lost a huge amount of ground. This means that the drop in economic confidence has been accompanied by a major drop in political confidence. A hastily-prepared budget brought thousands on to the streets in protest against cuts in education and health care for the elderly. Mr Cowen had to scramble to fend off a potential backbench mutiny, and was forced into undignified reversals. He and his inner circle of ministers have never fully recovered from the loss of authority which that entailed.

And voters have since then been further enraged by revelations of expensive ministerial extravagance during trips to America. The government's stock has dropped almost as much as the value of the Anglo Irish Bank, going down 15 points in the latest opinion poll to a historic low of 27 per cent. Half of those who say they support Mr Cowen's Fianna Fail party say they are dissatisfied with his administration's performance.

This dual lack of faith in the economy and the political system is a major complicating factor for a country with its back to the wall. One side-effect is that some people in a country which is bracing itself for tough times are already musing that there could be a return to the old values. As one observer put it, "Some people here are saying this might be very good for us – people of a religious disposition who think there is more to life than materialism."

Provided by The Independent—from London, for Independent minds