Ireland: As the Celtic Tiger roars its last, Ruaridh Nicoll reports on fear of an Exodus from Ireland

The roar of the Celtic Tiger drew thousands of expats home to Ireland in the 1990s. But the good times are over. Now the youngest and brightest are leaving, driven out by a decade of madness that could haunt the republic for generations

Driving north from Waterford, Michael Dermody and I are caught for a moment in a beautiful light. The sun has fallen into a gap between clouds that have dulled the day, and the farmlands of County Kilkenny. "That'll be your last Irish sunset for a while," I say, for the 25-year-old is on his way to Dublin airport, and then to Rome, Bangkok and finally Perth, Western Australia. He looks away. "There will be a lot of lasts now," he replies, "but I don't look at life like that."

For 15 years, as the Celtic tiger has leapt and growled, the Irish countryside has been sustained by developers who, on a credit binge fed by bankers, have built and built and built. There was a belief that, at long last, the humiliations of the past were over. Anyone who warned of a bubble was abused, not least by the former Taoiseach, or prime minister, Bertie Ahern, who said, "I don't know how people who engage in [moaning] don't commit suicide."

I first met Michael before Christmas, while researching an article about the Gaelic sport of hurling. The team sheets listed occupations: carpenters, plumbers, masons. "It used to be that my friends wanted to go to college, then they started dropping out of school and taking on apprenticeships," he'd told me. "They were paid €1,000 a week and they were only 20 years old. They blew it all; out every weekend, nice car, nice clothes. They didn't think it would end."

But end it has. Each village we pass is home to empty apartment blocks. The wound of emigration - which seeped for decades, even centuries - has reopened. "A couple of years ago, I might have known two people in the whole of Australia," Michael says. "Now I know 30.

I have about five or six friends in Perth alone, all from within 10 miles of my house."

As I travel round Ireland, I will be told that the boom has changed the country for ever and, what with modern air travel, the exodus this time will be temporary. Yet technology, in the form of Facebook and Skype, is a powerful new agent in the emptying of villages. "Those who go are in contact with the lads back home," Michael says. "They are telling us what a good time they are having, asking, 'What's keeping you?'" The network that has always been so important in Ireland - those ties of kinship and geography - now sucks the young away.

A little while before, Michael stood up from the farmhouse table, picked up a small rucksack and his hurling sticks, and said he'd best be going. His mother sat straight-backed, the pain hard in her eyes, her jaw set, as her son had a last gulp of tea. He tells me later that his parents "hadn't really spoken" about his departure, "but my mother is unhappy". This renewed emigration, after 15 years of migrants returning, horrifies the older generations. They know all it will take is a good job, a mortgage or a marriage to keep Michael abroad. "They want to know when I'll be back, but I don't really know," he says, as we head into the darkness. "If it doesn't work out in Perth, I wouldn't be averse to New Zealand."

On Dublin's Custom House Quay, six starving figures stagger towards an invisible ship. Or perhaps, given that the statues recalling the famine were erected using money raised by, among others, Ireland's new rich, they are heading towards Shrewsbury Road. No street shows just how far from poverty the country has come, or better embodies the extraordinary distances some will go in search of affirmation. The houses may be lovely - for the most part redbrick, substantial and sitting in generous lawns - but they are far from palatial. Yet in 2005, a home here sold for €58m.

There are plenty of astonishing figures in this boom. There were 6,507 racehorses in training in Ireland in 1992, yet by 2008 some 12,119 thoroughbreds were kicking up the gallops. From four private aircraft, the numbers of helicopters and jets rose to an estimated 80, with more being bought in Ireland than in any other EU country. Where once there were only a few thousand people who could afford to follow Munster's rugby players abroad, an estimated 65,000 arrived in Cardiff in 2006 to watch them become European champions.

And now? Well, in the 2006 census there were 200,000 empty homes, a figure that will now have significantly worsened. Horses are being offered to trainers by hard-up owners, or being left by the side of the road, or even shot. "All those planes and helicopters are for sale," I am told by one businessman.

Still, for many, the good times had been grand. In the late 1980s, economists close to Fianna Fáil, the broadly centrist political party that has clung to power like few others in Europe, had slashed taxes, regulations and corporate rates in order to make Ireland third only to Hong Kong and Singapore as the world's most free-market country. The move, satirised by journalists as the "Doheny & Nesbitt School of Economics", after the pub they claim had given birth to it, would see 40 per cent of all American money invested in Europe wash up on Ireland's shores.

Ireland had two booms, explains Fintan O'Toole, commentator, critic and historian. The first came in the 1990s. Foreign investment offered work and opportunities to the well-educated, English-speaking workforce. The whole country rose on the tide, and many of those who emigrated in the 1980s came home. As the millennium turned, however, a parasite embedded itself in the economy. Recessionary interest rates set by the European Central Bank allowed Irish bank executives to borrow huge sums, which they lent to their chums in the property business (and sometimes to themselves). When Anglo Irish Bank, the worst offender, called in the government in December 2008, it had lent 15 people more than €500m each.

This money fuelled an explosive burst of confidence. A series of spectacular new buildings appeared downstream from those starving figures on the banks of the Liffey. The "Builders", as the big property developers are called, sold land to each other at spiralling prices. These men - they were all men - whose fathers might have ended up working on English construction sites, were commissioning skyscrapers not just in Ireland, but in New York, Chicago and London, arrowing around the globe on Falcon jets. They set an example that every Irishman who had ever put mortar to brick followed.

The Builders became glamour figures. In 1999, one of the most notorious bought a plot, perhaps a quarter of an acre, in Shrewsbury Road for Ir£3m, and then promptly sued the neighbour who had sold it to him in a boundary dispute. As he built his house, Sean Dunne, 54, compact, likeable, with neatly groomed grey hair and small, terrifying blue eyes, must have sensed he was where he wanted to be, a long way from his childhood in County Carlow, in southeast Ireland, where, as he once put it, "If me or my siblings needed a bath we went for a swim in the River Slaney."

Dunne would fly close to an economy burning like the sun. He caught the country's imagination in 2004 when he followed his wedding to a gossip columnist with a 14-day celebration in Italy aboard the Cristina O, Aristotle Onassis's old yacht, complete with guests such as rugby international Ronan O'Gara and fashion designer Karen Millen. It was "redolent of nothing so much as The Great Gatsby," cooed the Sunday Independent, with a mixture of awe and sarcasm. Dunne then stunned the public with the purchase, at the height of the boom, of seven acres of Dublin's fancy Ballsbridge neighbourhood for €379m. He planned to raise a "diamond-cut skyscraper" of 37 storeys.

Much of the country was going crazy. The German ambassador caused a diplomatic incident when he complained that Irish life had become coarse. The church, so long a moral force, was silent, muzzled by a succession of scandals involving paedophilia and the abuse of children in care. To explain what had happened, Fintan O'Toole takes me to Les Frères Jacques, a restaurant opposite Dublin castle that "in better times", he says, had been a favourite of poets. When we visit, it is empty. "Our story was one of failures since independence," he explains. "In the 1950s, there were serious analysts saying there would be no one left on the island. In the 1980s, the Irish Development Agency put up a poster at the airport showing a graduation class of University College Dublin, and it said, 'We are the young Europeans'. A year later it turned out that every person in the poster was gone.

"When your young are leaving, there's a sense of national inferiority, of failure," O'Toole explains. "You know at a fundamental level that the country isn't working. At a familial level, it's awful. It leaves a pretty deep scar. Then when people start coming back, there is a very tangible sense of change, of hope."

According to O'Toole, "People bought into the idea that this wasn't just an economic boom - it was a national vindication, a healing, the sense that our bad past was gone, and gone for ever." But he warns against confusing a sense of humiliation with an understanding of the past: "One of the most ridiculous clichés about the Irish is that we are obsessed with history. In recent decades it's been the opposite; we have been living in a continual present, in the sense that now is the only place that ever existed."

On 6 October 2003, in Goatstown, a suburb of Dublin, one of the winners in Ireland's boom met one of the losers, and for both, that moment was surely all that had ever existed. Charlie Chawke had just carried the weekend takings from his pub, the Goat, to his car - it was more than €48,000. "I looked into my mirror and saw this guy coming at me with a sawn-off shotgun hanging from his left shoulder," he says. "He opened the car door and said, 'Give me the effing money.' I could see the gun and I went for it. I was a hurler in my time and fancied my chances."

Charlie isn't a man who takes much notice of lessons of history, and so, in his way, he embodies the change that swept through Ireland over the past 20 years. He was raised behind the bar in his father's pub in the village of Adare, outside the western city of Limerick. He moved to Dublin and, a natural-born gambler, bought the Goat. He used the leverage offered by the banks to expand and, it's fair to say, enjoy himself. Now he is part-owner of Sunderland football club, a shareholder in Celtic, and owner of eight pubs across Ireland.

The first point to be made about Charlie is that by 2003 he was a millionaire, possibly many times over. There was no need for him to fight, but he fancied his chances. But then, like many of his compatriots, he's not a man to put much store in the lessons of history. He missed the gun. "I fell. So, I was lying on the ground and he said, 'Ach, you're a smartarse,' and he put the gun to my knee and blew the whole knee away." Charlie nearly died on the road as his staff attempted to stem the flow of blood with a tablecloth.

Point two about Charlie is that he seems to know everyone. He was, for example, once friends with Sean Dunne. In fact, as the Builder pushed for planning permission for his 37-storey diamond-cut dream in Ballsbridge, Charlie took over a bar on the site. That didn't end well either. Dunne grew dissatisfied by the value of the contract and wanted more. Charlie refused, and so his staff were locked out of Dunne's hotel on the very day his daughter was getting married in Adare. "He ruined my daughter's wedding," says Charlie. "And I can never forgive that."

Point three about Charlie is that he remains gloriously unembarrassed by the clique at the heart of Irish life, and the part he played in it. To discover why, we talk about a horse called Forpadydeplasterer. In 2007, Charlie had an idea while driving back from the Galway races, an annual jamboree infamous for its swirl of money, politics, traded favours and drink. The then Taoiseach Bertie Ahern - "a very nice man and a good friend of mine" - was having a few problems over undeclared donations. Asked to name the donors, Ahern had caused hilarity by identifying one, now a wealthy developer, as Paddy the Plasterer. "I thought, 'Now that's a great name for a horse,'" says Charlie.

So Charlie bought a horse and called it Forpadydeplasterer, and because Charlie had also given Ahern money, unkind observers have suggested this might constitute two fingers up to the authorities. And then what happens? Forpadydeplasterer wins the Arkle Chase at Cheltenham.

"We're a very small country and if I want something done, somebody'll know somebody who'll do me a turn," says Charlie. "And maybe that has been part of the problem. We find it hard to refuse people. I know in my business if somebody comes in and needs 500 quid, they get it, and they'd expect to get it." And as it goes with Charlie, so it went with Ireland. The Builders went into see their friends in the banks and the money was handed over. They got it, and they expected to get it.

Of course, not everyone made beasts of themselves. So far this has been the story of machismo, yet among the Irish middle classes, there were great benefits from a strengthening economy. "There is an expectation that everybody made money in property, but many of us didn't," gallery owner Josephine Kelliher tells me. "We did well, in that we had steady jobs and bonuses. We were able to do pretty ordinary things: two holidays a year, buy a painting, put on an extension."

But Josephine, like many professionals, now finds the country she thought she knew dramatically changed: "I am very disappointed, and embarrassed. People genuinely had no idea this level of mismanagement was going on."

Josephine left business school in 1989 and opened a contemporary art gallery, so had the perfect view on an extraordinary transformation. "Starting in 1996, there was a huge influx of people who'd worked abroad all their adult lives and had expected to stay abroad for ever," she says. "They were in their 30s and 40s, and certainly, I had never expected to see their return."

The consequent cultural renaissance allowed her to prosper, building up clients, often through the architects working the space between Dublin's cultural life and the Builders. She wasn't alone. The gay scene, so long hidden, burst out and took its rightful place in society. But now, the architects are going bust.

So who is to blame for all this? The Builders? Well, only a fool would have mistaken them for angels. The banks? Certainly, Sean FitzPatrick, Anglo Irish's ex-chairman, makes Sir Fred Goodwin look prudent. But as O'Toole argues, such conjecture is to let the guilty go free: "To place all the blame with the banks is a cop-out. This was crony capitalism, a political problem. We've had two prime ministers in the past 20 years who were on the take - Ahern and Haughey. Which is a lot, considering we've only had five."

There is another moment in recent Irish history worth recalling. It's 14 May 2001 and Bertie Ahern is throwing a party for 1,400 at Dublin castle, celebrating the rise of an Irish archbishop to cardinal. Ahern had sent out the invitations in his name and that of his then girlfriend, Celia Larkin. This romance was already a thorn in the new cardinal's side. Celia is a beautician and her parlour, Beauty at the Blue Door, stands all but opposite the cardinal's front door. Each morning, as the archbishop left his house, he would not only be reminded of the moral decay at the top of Irish society but also of the latest innovations in ladies' grooming, including the Brazilian. Celia was swiftly exfoliated from the party's greeting line.

These days, the priest can relax. An increasing number of people are attending mass. Ahern stepped down when his finances proved too shaming, replaced by Brian Cowen, the former finance minister, who, while unloved, is seen to be honest. Meanwhile, Sean Dunne stands in a small conference room in the Berkeley Court Hotel, Dublin, working out how to cover the interest payments on the ground below, his skyscraper dreams ruined by the planning authorities. Charlie Chawke sits in his pub, mildly regretting a few business deals but declaring the recession over, in the Goat at least, because of his win at Cheltenham. As I leave that evening, he is singing quietly to himself: "Padydeplasterer, nobody does it fasterer."

But the recession isn't over. High society may have adjusted, eschewing Dublin's Michelin-starred restaurants in favour of lower-key eateries such as the Town Bar & Grill (the night I was there, Tony O'Reilly, the great business prince of the years before the boom, walked in - an event the owner said was unprecedented). Beyond such glamour, the collapse of the property bubble has seen unemployment rise past 11 per cent, banks nationalised, the economy forecast to shrink by 8.3 per cent, negative equity engulf great swathes of the population, the nation's international credit rating downgraded, economists warn of national bankruptcy, and taxes rising by €4,000 for the average family. As Paul Krugman, the Nobel prize-winning economist, recently wrote, "As far as responding to the recession goes, Ireland appears to be really, truly without options."

I take a train out of Dublin to Adamstown, and step out into a weird semi-wilderness. The station is like the bridge of the Starship Enterprise, manned by a lone ticket collector almost mad with boredom. Outside, a single building stands in a churned-up field, the centrepiece of a new town once heralded as the model of Irish development. I follow the deserted road east, beside a plyboard fence announcing a yet to be built swimming pool - "Come in, the water's great" - until I come to two primary schools and a few apartments. It is playtime and all the children are clearly from elsewhere. Which, I confess, comes as a shock.

Mena Baskarasubramanian is from the south of India. Until three years ago, she was living in England, but her husband's job in the IT department of a bank ("I know," she cries. "I know,") had been reassigned to Dublin. "When we arrived I heard about Adamstown and so I came to look for a house," she tells me. "It was 2006 and you wouldn't believe it, people were queueing all night." She secured a two-bed apartment for her family for €300,000.

Now chairwoman of the local primary school, Mena explains that 95 per cent of the students are from non-Irish backgrounds, with 26 nationalities. With an open face and wonderful optimism, she talks of the connections she is making, the beginnings of a very Irish network of Croats and Kazaks, Brazilians and Somalis, and Indians, and, more importantly, her fears for it. "Because of the recession, people are going back to their countries. The Polish workers are going. Doctors are moving to the Middle East. I don't want to lose this beautiful structure we have at the moment."

The value of Mena's flat has fallen by €50,000, and many of the cranes over Adamstown are no longer moving. "Some of the units have been stopped. The retail spaces were supposed to be open last year." I ask if her small boy will take up hurling. "Probably. My daughter is becoming Irish, she loves Irish dancing. The other day, two children arrived not speaking a word of English, but after four days they were singing Irish songs, thanks to our four language-support teachers." Again, the enthusiasm falters. "Due to the cutbacks it's been reduced to two. We don't know what we'll do next year."

The Celtic tiger is dying, and nobody knows what will be left. Mena's fears - about jobs, about negative equity, about the community drifting away - are every woman's fears in Ireland. Some people tell me that this time it won't be like the 1980s, that with the whole world in recession there is nowhere for the young to go.

So I email Michael Dermody. "We made it to Perth without any problems," he writes in reply.

"I am busy house- and job-hunting. It's a beautiful city and the weather is lovely. I haven't tried any surfing yet. I heard shark attacks are fairly common this time of year, so reckon I'll wait another few months."


Ruaridh Nicoll

The GuardianTramp

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