A leading financial expert has warned that Ireland’s crippled economy will soon be dependent on payments sent homes by emigrants.

Martin Hughes is a London based investor and the brains behind the Toscafund hedge fund that is regarded as a major success.

He is predicting that by 2020, the collapse of the Celtic Tiger will force emigration to levels that will see the country’s population drop to figures last seen in 2004.

And his fund experts say that the exodus of Irish nationals abroad will scupper all hopes of an economic recovery for his homeland.

Toscafund’s chief economist Savvas Savouri warned: “The departure of Irish nationals as well as those who migrated to the Republic during more favourable economic times will pull down consumption levels and real estate prices.

“The new norm for Ireland and others across Europe will be quite literally living on reduced means and relying on a quite different economic model from their recent pasts.

“Quite different but not, we must add, altogether new. Having not depended on remittances for many decades, Ireland, like Portugal, will come to rely on these once more.”

The comments come as the Irish government again tries to renegotiate the terms of the bank bailout deal with the EU and the IMF.

Britain’s Daily Telegraph newspaper has seen notes from Savouri with the grim warning.
“Having seen tourism as a bonus on top of a well-functioning internal economy, Ireland, like Spain, will see this return as fundamental in generating foreign income.”

Savouri added: “Having seen the export of goods - including agricultural products - as part of a rather primitive growth model, Ireland, like Greece, will have to return to some significant form of this.

“As much as this economic repositioning will be seen as regressive and unwelcome by many, the reality is that it involves the few options the weaker members of the eurozone have, and Ireland is no exception.”

Toscafund, in contrast, predicted that Northern Ireland’s population was likely to increase by a tenth during the same period and foresees that both the UK and Ireland will benefit from closer economic ties.