I reckon part of the story is who we are indebted too. The second order effects will be different if the debt is to overseas creditors - since then there is little to no possibility that the interest is going to be spent here or reinvested here.
The economy has become addicted to the cash inflow from borrowing, and since this is unsustainable over the long term, there are going to be serious withdrawal symptoms when it slows down. It looks like even a moderate slowdown in borrowing, from “utterly unsustainable” to merely “quite unsustainable” will still trigger a serious recession. This could easily snowball, as the recession discourages borrowing even more, and less borrowing deepens the recession. Since borrowing at 60bn a year is possibly an all time international record at over 30%+ of GDP, the impact will be likewise.
Repayments will hurt over the long term unless the economy ‘out-grows’ the growth of the repayments - this is the definition of ‘sustainable’ levels of borrowing. Since borrowing in general has been growing at 20%-30%, while the economy has been growing at 5%-10% (nominal), we’re losing that race badly.
Borrowing from foreigners will eventually have the net effect of removing money from ireland. Since much of the borrowing has been funded substantially by germany via the euro bond market, and japan via the carry trade (anyone have a source of numbers on these?), we are getting the benefits akin to exports now but we’ll get the bigger pain akin to imports later.
Or in short:
To stop borrowing will kill us quickly.
To keep borrowing will kill us slowly.
Past borrowing from foreigners will kill us anyway.