The Irish unemployment rate was an already high 7.7% during the October to December quarter of last year and 370,000 people claimed jobseeker’s allowance in February - 87.5% more than a year ago. The Irish economy shrank by 7.5% in the same quarter and its budget defecit is likely to hit 17.5% this year against an EU rule that 3% is the maximum allowed (although it won't be alone in this).

London based fund managers Nevsky Capital have warned that Ireland may be the country that wreaks havoc in Europe. With rapidly collapsing Gross Domestic Product (GDP) and limited means to inject a fiscal stimulus Ireland is in a bind.

Membership of the Eurozone has not helped them because the Euro has appreciated by over 30% against the £ and the UK is their nearest trading partner. Rising unemployment is placing an unsustainable burden on the public purse with every 1% rise adding an extra 30 basis points onto public spending.

A collapsing property market; an increasingly unemployed and uncompetitive workforce; a currency that is too strong for the country’s good; comparatively high Eurozone interest rates; almost non-existent reserves and the liability for guaranteeing 100% of all bank deposits are conspiring to bring the country multiple problems.

Nevsky Capital can see a scenario where Ireland has to declare itself insolvent which turns the spotlight on Greece, Portugal and Spain all of which would look to the Eurozone for a bail out but Germany and France are also contracting sharply and may be ahead in the queue.

In the worst case scenario, if Ireland was the first domino to fall in Europe it could signal the end of the Euro experiment and a deepening of the recession that is bringing misery to millions. Why is this relevant to the UK which isn't in the Eurozone? Because the EU is our largest trading partner and, in a globalised world, what happens there directly affects us.

Next week, the Irish government is due to unveil an emergency budget to try to stave off the worst. More than just the Irish will be showing a keen interest.