The consumer is finally fighting back – or is that running up the white flag? A succession of vested interests and economic participants from the banks to the government have heaped charges, levies, rate increases and VAT hikes onto this fragile economic animal and finally there are signs of a spending revolt.

Last week's tax receipts clearly showed that consumers are stretched to breaking point and are withdrawing from the high street, punching a hole through the government's VAT receipts.

Why is anyone surprised by this? Income tax is a non-discretionary tax; VAT is not. Consumers can reduce their retail spending, falling back on staples that attract either zero VAT or a reduced rate.

Some commentators believe a slowdown in the rate of job shedding will prompt consumers to spend a little more later this year, but why should that be so? Ireland is a small country where the fear generated by job losses spreads quickly and deeply into the community, keeping precautionary savings rates at dangerously high levels for an economy that is already shrinking.

The December budget will introduce measures that are going to remove another chunk of money from the economy. Finance minister Brian Lenihan claims this will take the form of public spending reductions rather than tax increases, even though the Commission on Taxation will shortly propose a property tax and a carbon tax.

Nobody who is making policy or running the banks seems to have any suggestion as to how the consumer can be protected from having his or her income further eroded. It is claimed that there is now deflation of over 5% year on year, but figures published elsewhere in Tribune Business show that large segments of the economy have simply not rolled back the huge price increases of recent years, despite the plunge in incomes.

The lifting of the gloom elsewhere in the world will also throw up the biggest challenge of all for Irish consumers. Last week, unemployment in the US astonishingly dropped to 9.4% from 9.5%, forcing the S&P500, the dollar and a whole range of commodities to surge. The only loser was the former safe haven of government bonds.

In Australia the scale of the recovery is such that an interest rate hike is now being pondered. The Australians have yet to say what kind of rate hike they are considering but they believe rates need to move back to "more normal" levels some time in early 2010. In the eurozone that is some distance away but it could happen sooner than many observers think.

After the scale of government interventions globally (quantitative easing, interest rate cuts, special liquidity schemes for banking, stimulus plans, assistance for car companies and grants for house purchasers) there is increasing concern about inflation and the debasing of formerly hard currencies such as the dollar and sterling.

For Ireland, which no longer controls its own interest rates, attempts to dampen inflation could spell disaster at a time when so many heavily-leveraged buyers have either variable or tracker mortgages. The recent decision by Irish Life & Permanent was one thing, but a series of sizeable co-ordinated ECB-led rate rises could tip Ireland's already battered consumer over the edge.

At the moment, Irish banks are in the main behaving benignly, but just consider this answer from AIB chief executive Eugene Sheehy last week when asked whether that bank was considering putting up mortgage rates.

"If you look at our total loans outstanding, there is only 12% of our loans – ie the tracker mortgages – where we're not in a position of being able to reprice the book. So we can reprice 88% of our book, and we would do so obviously over time. Assets reprice a lot slower than liabilities, but you can see in the margins coming through that there is a gradual repricing of the asset side."

Strip away the banker speak and its clear that AIB will soon move on its mortgage products too. Those who avoid this fate, tracker customers, will be finished off by ECB moves sometime next year as the eurozone recovers and Jean-Claude Trichet and his cohorts start studying their inflation targets once more.

The government and economists are hoping that consumers will start switching to fixed-rate mortgages soon to offset the damage. But plenty of homeowners simply cannot afford to price up to a fixed rate, however rational it might be economically.

The stirring of a global economic recovery can be seen everywhere, but the Irish consumer/borrower should not necessarily see this as a good thing considering the amount of debt people are carrying over from the boom.