A: The Celtic tiger has in three years gone from boom to bust after a housing bubble burst with house prices falling 60%. Bad debts have forced the Government to bail out the banks, hiking its budget deficit to forecast record levels.
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Q: What effect has this had on ordinary people?
A: Apart from the collapse in house prices, the Irish have already endured almost £13 billion in cuts over two years and unemployment is up from 4% to 14%.
Q: What have the markets got to do with the crisis?
A: Lenders want certainty that they will get their money back. A big deficit increases the risk of default and pushes up the cost of borrowing as confidence is weak.
Q: How much is being loaned?
A. About £72 billion from the EU and IMF. Because of Britain’s close ties with Ireland -- its financial institutions have £140bn tied up in Irish banks -- the country has offered a £7bn bilateral loan.
Q: Are there any strings?
A. Yes -- yesterday’s austerity budget involving an £8.5bn cut in spending and a £4.3bn rise in taxes by 2014.
Q. What happens next?
A. A vote on the 2011 budget takes place in the Dail on December 7. The Greens, the junior partner in the Fianna Fail coalition, say they will support the budget but only if a General Election follows in January. Mr Cowen has already said this will happen.
Q. Will he and his Government survive?
A. No. The expectation is that a new government between the centre right Fine Gael and the centre left Labour Party will be formed.
Q. Will the austerity package work?
A. Many analysts doubt if Ireland will achieve enough economic growth in the years to 2014 to be able to pay off its debt. So the four-year austerity programme could quite easily run for several more years.