I am writing an article for EconoMax on how governments in many EU countries will abandon formal fiscal rules for the time being in response to the challenges from the credit crunch. News came through today that Ireland - former celtic tiger economy and a nation with one of the highest per capita incomes in the twenty-seven member nations of the EU - has announced a huge rise in government borrowing. It will blow the existing fiscal stability pact rules out of the water.

Ireland’s government now expects to borrow around Euro 12 billion next year - equivalent to 6.5 per cent of gross domestic product. A series of large budget surpluses have disappeared into thin air. Public sector debt is set to rise from 25 per cent of GDP to 44 per cent next year.

One reason is the sharp rise in unemployment which is now at its highest level since 1999. Ireland was officially the first European Union economy to drop into recession during the current economic crisis.