Ireland is about to experience its first middle-class recession. The big difference between this recession and previous ones is that this one will have a dramatically negative impact on the expectations of a generation whose world-view was almost unquestionably positive.
Commuter towns such as Naas, Arklow and Navan are likely to be hit hardest and the people who will lose their jobs and, eventually, their homes are the very ones who bought into the boom
most. They are the young working families, largely employed in white-collar jobs, who believed the hype and bought the new houses, complete with decking and barbeques, close to the top of the market. They are the Decklanders and Ireland is about to endure the great "Deckland Depression".
Figure 1 Heavy Reliance on Building Investment from a review of the Irish Economy published by the IMF in 2006. It observed that growth had become increasingly unbalanced in recent years, with heavy reliance on building investment, sharp increases in house prices, and rapid credit growth, especially to property-related sectors. At the same time, competitiveness had eroded, reflecting the combination of faster wage growth in Ireland compared to its trading partners, declining productivity growth, and the appreciation of the euro against the U.S. dollar. Directors observed that Ireland's small, highly open economy was also vulnerable to external shocks.
