Has the Celtic tiger lost its roar?

A collapsing property market, slowing consumer spending, rising unemployment and an economy that is fast deflating: that might sound all too much like a forecast for the British economy. But actually it’s a description of the Irish economy right now.

For the last decade, Ireland has been the most dynamic economy in Europe, with growth rates that far outstripped any of its rivals. This republic of not much more than 4 million citizens has turned itself into one of the most prosperous nations in the Western world. Fuelled by a long boom, a swaggering generation of Irish tycoons has emerged, buying up businesses around the world.

Yet in the space of a few months all that has swiftly turned around, amid collapsing property prices and fears of a subprime financial meltdown. The Celtic tiger looks to have lost is roar. ‘Growth is going to slow down dramatically this year,’ said Alan Barrett, an economist at Dublin’s Economic and Social Research Institute. ‘We are facing a dramatic contraction in the housing market.’

The interesting question now is whether Ireland’s transformation was always a bubble built on property speculation and cheap money, or whether it was built on something more durable that can outlast its current troubles. The Irish economic miracle has certainly been one of the more startling global success stories of recent times.

Forget China, India or Estonia. To see a real economic transformation in this decade, there was no need to cross anything more exotic than the Irish Sea.

Switch back a generation, and Ireland was an economic backwater. It had a state-dominated, largely agricultural economy that lived in the shadow of Britain. For generations, Ireland’s best and brightest made their careers in London, New York or Boston.