The government's economic strategy rests on two pillars. Cut the annual budget deficit by the extended deadline of 2014. Then rely on surging global demand to suck in exports from Irish factories to help mend the scar of Irish joblessness – among the deepest in the Organisation for Economic Cooperation and Development. But there is little evidence that this twin strategy will work.

The political consensus has dictated the government's handling of financial markets. Last year it was about protecting the free float of the insolvent Irish banks lest the government be bounced prematurely into formally nationalising the three Irish stock market-listed lenders. This year the government wants to avoid upsetting the sovereign debt markets, in case Ireland is bounced, like Greece, into making deeper cuts to a tighter deadline.

Government policy is based on cutting the budget deficit from the Greek- and British-sized annual deficit of 12% of GDP to 3% by 2014, and then hoping that world recovery will create jobs.

Yet, talk to leading economists and commentators from the left, right and centre and, remarkably, many warn that one or both of the pillars are shaky.

Most warn that waiting for global demand to reduce unemployment is a big gamble because indebted economies, not least Ireland's major trading partner Britain, will fail to return to their previous levels of consumption. Unemployment will likely remain high for the rest of the decade, they warn. Here is what they said:


Ray Kinsella, a professor at the UCD Smurfit Business School, who formerly worked as an economist at the Central Bank and at the old ministry for trade, warned that the government's austerity budgets will devastate Ireland. Its long-priced bet on a strong recovery in the international economy will be a beaten docket.

"This involves getting a budget deficit of more than 12% of GDP down to 3% in the next three years. You have to say to yourself, we have had four budgets now and each of those has been deflationary and unemployment will rise to 500,000. We simply can't afford to keep losing that sort of capacity. Firms are failing every day," said Kinsella.

"Potential is being lost – I can see it in the university students who are leaving the country. I am very clear that continuing the current fiscal policies will destroy the capacity of the Irish economy to recover," he added.

The European Commission designed the deficit-limiting Stability and Growth Pact at a time when "a catastrophe of this scale was not on the agenda", Kinsella said. There was now no point in Ireland, Greece, Portugal, Spain and others digging themselves "deeper into a hole".

Brian Lucey, who describes himself as a centrist in economics, is an associate professor of finance at Trinity College Dublin, and believes there is a "cosy political consensus" that world demand for Irish exports will pull the economy out of recession.

"The evidence of the last five years is that we have not been able to generate export-led growth. It would be great to go back to exports but we do not have the record. There is no minister for export-led growth," he said.

Lucey said the government and media commentators were in danger of inflating another bubble of "smugness", namely that Ireland had hit upon the perfect strategy of digging itself out of the slump. "We are in for the mother of all shocks this year, next year and the following years," he said. Still, said Lucey, the budget cuts needed to be made quickly. "Let's get it over and done. It is better to have the pain now than spread it out," he said.


Constantin Gurdgiev, the TCD economist who describes himself as a libertarian, a champion of the markets, said there was "a dangerous perception" that the financial markets have backed the government's strategy in tackling the crisis. In truth, he said, international analysts spend little time examining the Irish economy.

Gurdgiev opposes extending the budget deadline beyond 2014, and believes cuts and reform in the public sector should be made more quickly.

"There is not a snowball's chance in hell that we are going to get to the 3% because the government is unwilling to take the steps that are needed in cutting public spending."

He is "very pessimistic" on world growth. "My view is that very few people in Ireland are prepared to admit that there will be lower growth. For Irish unemployment to fall, the US and British economies would need to grow by up to 6%. But it is no longer going to happen because the eurozone is no longer going to see strong growth and there is no reason for the multinationals to place new investments here," he said.

Moore McDowell, the UCD economist, said the next few weeks would tell whether the government hits its 2014 target.

"It depends on whether they can see off the public sector in the next three months. The longer we delay doing it the bigger the debt you end up [with]."

Does he believe in export-led growth? "I think there is every possibility of a double-dip recession. I do not think there is going to be a big surge in world growth and unemployment will stay high for a long way out," he said. "I would reread HG Wells, build a time machine and I would go back and I would not join the euro."


Marie Sherlock, economist for Siptu, said she believes the government will not reach its 3% budget target by 2014 and that economic growth will fail to meet expectations. Companies setting up in Ireland will face "a massive mis-match" in the skills they need from the labour force.

"Among unemployed men, about two-thirds do not have a third-level qualification. There is a big question there about how ready the country is to match the unemployed with future labour demand. And while we have a national crisis, it is even tougher in the regions," she said.

"At the time of census, in Donegal and Wexford over a quarter of men in 2006 were employed in construction. They were working in Dublin and other places," she said.

Sherlock said the latest figures from Germany and US showed that the belief in a strong international rebound was questionable.

"Scratch below the surface and consumers believe the worst is over for the economy but not necessarily over for their own household," she said.