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Britain will be the next Ireland

Ireland is now in a vicious spiral of economic contraction. Will Britain be next?

An angry builder drove his cement mixer into the Irish Parliament building to celebrate its re-opening after the summer break. He had painted “Toxic Anglo Bank” on the drum. This year, the cost of the rescue of just this one bank will be one fifth of national income. And that income is still falling.

The Celtic Tiger’s economy shrank by 15% from boom to bust. And hopes that it would bounce back in a “V” shaped recovery seem dashed, with latest projections suggesting stagnation or further contractions.

Ultimately, the Irish government can still borrow, albeit at high cost, because it can call on Irish taxpayers to pay the interest on its bonds. But Ireland has long been a country of emigration. If prospects look really dire, with taxes high and growth low, the productive will start to leave the country again – jingle mail on a national scale.

So does anything stop Britain going down this frightening path?