Downtown blues: The once-busy Temple Bar has lost many regulars due to the downturn

Brian and Rosie Condra grew up poor. But as prosperity washed over Ireland in the first decade of the 21st century, they managed to buy a modest house, start saving for their children’s future and, for once, do more than simply make ends meet.

“We were on the up and up,” Brian Condra said. The Condras are among hundreds of thousands of Irish who, over the past few years, finally started to catch up with and even surpass many of their European neighbours. But now, after a stunning plunge triggered by a disastrous banking collapse, the economy has fallen back to where it was in 2005, before a housing bubble stoked a growth frenzy.

“The last several years of growth in Ireland have effectively been wiped out,” said Constantin Gurdgiev, an economist and lecturer at Trinity College in Dublin. Indeed, for many people in Ireland, it is as if the boom never happened. And some of those who floated up during the good times now see themselves slipping even further behind.

“It’s like we drew the lottery ticket made in hell,” said Condra, who says he gets by with only two pairs of shoes, one for work, so that he can afford to meet the needs of his growing children. “Suddenly we see that the Europe we’ve bought into isn’t a golden utopia.”

Benefiting from years of low interest rates that followed the creation of the euro zone in 1999, Ireland enjoyed one of the biggest growth spurts of any country in Europe and spent lavishly as its wealth increased. The economy expanded an average of 7 per cent in the decade leading up to 2007 before plunging into a deep recession. Per person, inflation-adjusted economic activity has fell roughly 18 per cent from the peak, when the average gross domestic product per person was a shade over 43,000 euros, or about $62,000. Now it is less than 35,000 euros.

Indeed, as the country tries to recover from the bust, many of its people are paying a tremendous cost for the folly of the country’s banks and to bring its government finances back in order.

As part of Ireland’s effort to pay down its immense debts and bail out the banks, the Condras’ salaries from their state jobs as hospital workers have been cut 20 per cent in two years. Higher taxes and further spending cuts are on the horizon.

Moreover, the European Central Bank, for the first time in three years, is raising interest rates, which will increase borrowing costs on existing home loans. This frightens the Condras even more.

“Now we’re terrified that we won’t be able to pay our mortgage and could move into social housing,” Condra said.

Even people with good incomes who have not been hit as hard as the Condras are convinced that Ireland is facing years, perhaps a full generation, of economic struggle.

With unemployment at 14.7 per cent and expected to rise further, thousands of young Irish continue to leave the country to find work. Those who have good, secure jobs here are thankful, but even they worry about the future and are rationing spending. Household savings surged to 11 billion euros in 2009 from 3.5 billion euros, and net disposable income fell.

Patsy Carney from the generic pharmaceuticals export firm, EirGen Pharma recognises what the collapse has meant for the Irish as a whole. “You see it all around you, all the people out of work, and there’s nothing turning up,” he says. “It’s frightening.”

But treatments at suicide prevention centers jumped by a third last year, with sudden financial troubles cited most often as the cause of despair. “It’s the psychological impact of austerity that bites the hardest and lasts the longest,” Condra said.

The biggest fear is that growth and jobs are not going to return as quickly as promised. Instead of investing in its future, Ireland is committed to spending at least 46 billion euros to bail out its banks, and must pay a substantial interest rate, around 5.7 per cent, on an 85 billion euro European rescue package. And fears linger that Ireland could default on its debts.

Angry voters swept out the government in March, making Ireland the first euro club member to punish its leaders for their handling of the economy. But the new prime minister, Enda Kenny, has little choice but to follow the austerity blueprint, which the International Monetary Fund now acknowledges is delaying recovery. The fund cut its 2011 growth forecast to 0.5 per cent, down from an already meagre 0.9 per cent, as a programme to save an additional 15 billion euros over four years kicks in.

For the Condras, it seems like only yesterday that everyone in Ireland was living better than ever. The scene seemed too good to be true for even those people who had been near the bottom. Two years ago, Brian Condra’s take-home pay as a hospital porter in Dublin was 1,200 euros a month. He and his wife were able to begin saving for their children’s schooling and secured their first-ever loan to buy a small brick row house.

Their fortunes suddenly changed though, when Ireland’s banks went bust. Unlike Iceland, which did not save its debt-ridden banks, the Irish government decided taxpayers would foot the full bill, which adds up to more than 10,000 euros per person.

Condra’s pay was successively whittled down. He now earns 240 euros less a month, and his wife’s income fell after she cut her work hours to stay home and reduce their child care expenses.

The forced austerity is tough, but his biggest fear, Condra said, looking at his three young children as they pried open a chessboard, “is that my kids will get caught up in a poverty trap.”

The couple stopped setting aside money for higher education so they can meet the mortgage payments. They no longer pay their electricity bill on time and have begun scrimping on items they took for granted, like butter. Birthday parties for their kids have been stopped; a vacation trip is out of the question.

Carless, Condra spends an hour on the bus each way to and from his job in Dublin; when he sees a politician in a shiny black sedan through the window, he fights back his gall. Nearly everyone they know is underwater on their mortgage; one neighbour expects to be foreclosed on in two weeks. And last month, eight homes in their otherwise quiet working-class neighbourhood were burgled.

Rosie Condra agrees that Ireland has to make good on its debts. “But they’re debts from the banks that we didn’t even know we had,” she said. “And the people least able to afford it are paying for everything.”

Forty-five minutes away by car, in a comfortable middle-class suburb of Dublin, Killian and Teresa ’Connell are thankful to be in a more stable position. Killian ’Connell, an information technology project manager at a Dublin stockbroker, was spared when his employer laid off 20 per cent of the staff.

Despite salary reductions and tax increases since then, the couple have been prudent and even budgeted to add on to their home to accommodate four fast-growing boys.

“If you still have a job, you’re good — you can survive,” said Teresa ’Connell, who stays home to care for the children, who are 2 to 11 years old.

The fear of austerity hampering a return to growth, is all but true. Teresa thinks prospects for their children is also dim. “Cuts don’t produce growth,” Killian ’Connell said. “We figure that by the time our children are in their 20s is when growth will come back.” For Brian Condra and others in more precarious situations, even the prospect of recovery brings little comfort.

“Growth would be tough in these times ,” he said. “But those working around won’t see a return to growth in their salaries for at least another five to 10 years.”

In the meantime, Condra added, “you have to hope for the best and plan for the worst. Because in Ireland, we haven’t gotten past the worst yet.”