Ireland is viewed by many on the outside as the best performer from the struggling euro zone peripheral economies, but there are plenty of voices within the country who doubt this can continue.
As the government prepares to unveil its 2012 budget—which has already been viewed by the Bundestag as well as the troika of the International Monetary Fund (IMF) , European Central Bank (ECB) and the European Commission—Ireland’s troubles are far from over.
And if the troika’s medicine fails to cure Ireland, the obedient patient, markets will worry more about the more recalcitrant Italy and Greece.
In recent months, received market wisdom has had it that Ireland, with its impressive growth and acceptance of austerity measures, is the least mucky member of the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain) .
“We always like being the best kid in the class, even when it doesn't get us very much,” David McWilliams, the Irish economist, author and broadcaster, told CNBC.com. “This doesn’t change that we have a debt crisis, a political crisis and an economic crisis all at once.”
“European debt markets have just closed, and Ireland is in tatters. It just hasn't worked,” he said.
Worries that the country has handed over too much power to the troika were heightened when it emerged that copies of a draft Irish budgethad been circulated to all of the European Union finance ministries. For a country which has been independent from British rule for less than a century, the suggestion that sovereignty was being slowly surrendered caused an outcry.
Michael McGrath, finance spokesman for the main opposition party Fianna Fail, said: “It would be a staggering and unprecedented breach of faith with the Irish parliament and Irish people” if budget details have been provided to German lawmakers.
'Sticking to the Plan'
The budget included a proposed increase in value-added tax (VAT) and a property tax, which will not gladden Irish consumers.
"It’s a distraction in a painful process, in which we are making reasonable progress,” Barry Dixon, head of research at Irish stockbroker Davy, told CNBC Friday.
“We all already know there’s going to be a 3.8 billion euros ($5.2 billion) budget consolidation in December, that’s nothing new. We are actually sticking to the plan, painful as it is.”
That plan helped the Irish economy grow by 1.6 percent in the second quarter of 2011, spurred on by an increase in exports.
"People are really positive about Ireland in the market. It has returned to growth and that is what sets it apart from the rest of the PIIGs,” Megan Greene, senior research analyst at Roubini Global Economics, told CNBC.com.
“Our focus is still on GDP growth,” Owen Dorgan of Ireland's Department of Finance told CNBC.com. “There is more positive information but the government is not being complacent and is sticking to targets set out within the plan.”
There are two key factors for the nay-sayers about Ireland. One is that yields on its debt remain stubbornly high, and were back up over 8 percent last week, although they are down substantially from their July peak. The other is that its fragile recovery is based on exports, and Irish consumers are continuing to cut their spending.
Yields are supposed to fall to 5-6 percent to make the bailout program go according to plan.
“The most important thing is that the troika was supposed to work in Ireland, to stop bond yields rising and promote growth,” said McWilliams. “It has spread so much that the troika is clearly null and void.”
Around two-fifths of Ireland's trade is with the rest of the euro zone, with another fifth to the US and a fifth to the UK, making it vulnerable to another slowdown in these areas.
Unemployment will still be at 11.6 percent in 2015, according to government forecasts, yet there are still no large-scale infrastructure or job creation projects.
However, there have been a number of high-profile investments from international companies including Twitter and Google in recent months, as the cost of Irish labor falls and its low corporation tax remains.
“There has been a significant improvement relative to the rest of the euro zone in terms of unit labor cost,” said Dorgan. “Still, a lot of leverage has to be taken out of the system.”
The Irish state has also committed to propping up its struggling banks, which are predicted to lose 20 billion euros over the next three years.
Greene believes that Ireland may eventually "strategically default" on its debt repayments if other bailed-out euro zone economies do so.
"They may think: 'If other countries don't have to pay, why should we?'"