This time last year it was all about the bailout. Now it’s about the possible collapse of the euro as many slip deeper into unsustainable debt

AT THE end of last year most Irish people thought things could only get better. Back then we had just surrendered our economic sovereignty to the IMF and EU troika, a government was in the process of a messy implosion, people were trying to come to terms with the third hairshirt budget in a row, the mortgage arrears crisis was deepening and all the economic indicators were suggesting that European Central Bank interest rates were on a relentlessly upward curve.

Fast forward 12 months and many of the problems have actually worsened. But first the good news. There is a stable government and ECB rates are going down again and, well, that’s it really.

The troika is still calling the shots – as became clear when the Irish people learned of a 2 per cent Vat increase in the Budget following a disclosure in the German parliament – and there has been another austerity Budget, with at least three more to come.

What is even more troubling is that many people are now openly discussing the once unthinkable prospect of the euro’s collapse and, with each passing month, the personal debt, negative equity and mortgage arrears crises get worse.

As each month of 2011 passed the Irish personal debt mountain grew and grew. The most recent figures from the Central Bank show 8.1 per cent of all home loans, or 63,000, have fallen behind in repayments by 90 days or more When those who are in arrears for less than 90 days are taken into account, the number increases to a staggering 150,000

And for many people who are not in arrears, life is almost unbearably tough. Just how tough became apparent in August when MP MacDomhnaill of Tralee, Co Kerry, wrote to this newspaper and explained how almost all the money he received in social welfare was feeding his mortgage and his family were going hungry.

“As I write this letter I am hoping that sleep can provide me with some escape from the anxiety and pain that the economic situation is wreaking on me and my family,” he wrote. “At this juncture, seeing as the part-time work on which I depended has entirely ceased, I have found myself and my loved ones having to cope with a new torment – hunger. Today I have had nothing to give my children only bread and cereal. The wolf that I have been keeping from the door has finally moved in.”

He was not alone and over the course of the year hundreds of readers contacted this newspaper to highlight the distress they were in as a result of unsustainable debt.

While the banks insisted they were dealing proactively with people who were struggling to manage the money they owe, readers relayed stories of unsympathetic banks playing hardball and pushing people to the brink

For MacDomhnaill, and thousands like him, claims from the new Government that it was tackling the debt crisis rang hollow. Minister for Social Protection Joan Burton in particular repeatedly insisted that the Government was moving as fast as it could to implement proposals contained in a major mortgage arrears report which was published this year.

Among the measures contained in the Interdepartmental Mortgage Arrears Working Group was the introduction of two “mortgage to rent” social housing schemes which would see approved housing agencies taking ownership of homes in specific circumstances, or the leasing of houses by banks to local authorities which would in turn rent them to former owners.

It also recommended that the mortgage interest supplement should be curtailed and replaced with a more sustainable solution, while an independent mortgage advice function to advise and support mortgage holders should be provided. However, none of these measures are likely to be taken until well into next year at the earliest.

Personal insolvency is central to solving the crisis and will be “the most challenging piece of legislation” to come before the Dáil, according to Burton.

Minister for Justice Alan Shatter is said to be “working flat out on it” but there is no timeframe for this other than “as soon as possible”.

For the thousands of people doing their best to enjoy Christmas while constantly aware that with each passing day they are losing the battle to keep their head above water, it cannot come soon enough.