The Republic is set to emerge from the worst recession in its history in 2011, amid the first signs of recovery in the world economy.

With the US stock exchanges gaining ground in |recent weeks, positive signs in the American housing market, and major gains by CRH — one of the leading stocks on the Irish stock exchange — a former Taoiseach and one of Ireland's most-respected economic voices has said that Ireland could return to growth in two years' time.

Former Taoiseach Dr Garret FitzGerald said that while the country will turn the corner in two years' time, Ireland's slump has been severely worsened by “highly damaging” policy decisions by the Fianna Fail government since 2002. He also singled out former |finance minister Charlie McCreevy as “appalling” in his handling of the economy.

Speaking to the Sunday |Independent he said: “This government has done huge damage in terms of our competitiveness, our costs are up to 30% higher than our neighbours'. The damage done by Charlie McCreevy when he was in Finance was appalling.”

Despite his stinging criticisms of the government, Dr FitzGerald said Ireland's |future is in export-led growth to the EU, which he says takes two-thirds of our export goods. “An export-led recovery of the Irish economy will have to await renewed growth of demand elsewhere in the EU. So, we cannot expect a general recovery here to start until 2011,” he said.

Crucially, he said Ireland's openness as an economy should ensure that “growth here for some years thereafter will be a good deal more rapid than elsewhere”.

“Because we are an open economy, we will benefit quicker from the rise in world trade than others. We have an educated work force and we will be well-placed to make the most of the upturn,” he said.

He also said that the pay cuts being taken by the private sector at present will help Ireland's competitiveness once the upturn comes.

The optimism espoused by Dr FitzGerald is not a view shared by many leading economists in Ireland.