1. How many more years of boom and bloom?

The old story goes that economists have predicted 10 of the last four recessions. So forecasts for the economy need to be treated with caution. Such is the paucity of up to date data on the Irish economy that it is difficult enough to assess the economy's current strength, never mind predicting what is going to happen over the next few years.

All the signs are that economic growth is continuing apace. One stockbroking firm estimates that the economy was growing at a whopping 8 per cent in the first quarter of the year, and most estimates are for growth to average 5 to 6 per cent this year.

So can the economy continue to fire on all cylinders over the next couple of years? Some slowdown from the record rates of growth of the recent past could be in prospect, but the economy still looks set for steady growth.

A number of the key factors which have driven the economy forward will continue to exert a strong influence. Exports should remain strong. Growth remains buoyant, for now, in the high tech sector. And crucially, industry should benefit from the expected pick up in the EU economies on the Continent in the second half of the year.

The other key consideration is the health of the domestic economy. Here prospects look bright in the short term at least. With no sign of an early increase in interest rates, consumer spending and business investment should remain strong. One possible fly in the ointment is the knock on effect of the BSE crisis on farm incomes.

The most interesting question and the hardest one to answer is how far the economic improvement of recent years has laid the foundation for sustainable long term growth. The economy has managed to grow at rates of 7 to 8 per cent over the past couple of years without whipping up inflation.

Moreover, we enjoy a healthy surplus in our day to day dealings with the rest of the world the current account of the balance of payments. Investment in infrastructure and in training, part funded by the EU in recent years, should improve growth prospects for years to come.

But there is hardly room for complacency. The latest EU report on the economy shows our overall level of investment remains below the average, despite all the EU money. The Central Bank is worried about inflation spreading from the property market to the economy in general. And all the while Irish companies are facing markets which are getting more competitive by the day.

2. Two speed Ireland

But if the economy is booming why is unemployment so stubbornly high and why are so many people struggling to make ends meet?

One reason is that economic and social problems which are years in the making do not disappear overnight. Ireland's high level of unemployment has built up steadily over a long period, rising from 5 per cent when we joined the EEC to almost 13 per cent today. The long years of economic under performance while huge numbers of young people came onto the jobs market each year help to explain our high jobless figures.

The other question raised by persistently high unemployment is are the benefits of the boom being evenly spread? Certainly, those relying on social welfare payments have seen their payments increase ahead of inflation, while steady increases in child benefit over the past couple of years have improved family incomes.

But the level of payments to the unemployed particularly the long term unemployed remains low. Overall welfare payments are still below those recommended by the Commission on Social Welfare.

The Conference of Religious in Ireland calculates that a single long term unemployed person has seen a net gain in take home income of 70 per cent between 1986 and 1995, compared with a 133 per cent rise for the secretary of a Government department. In cash terms the secretary is £447 a week better off, compared with £26 a week for the long term unemployed person.

In many ways Ireland has now become a two speed economy, with a widening chasm between those in work and those outside the workforce. A sizeable number of people, particularly the 125,000 plus long term unemployed, simply do not have enough money to participate in the economy's good times.

The unemployed are not the only people looking for a larger slice of the cake. Many employees are also pushing for wage increases, after several recent Budgets failed to deliver significant increases in take home pay.

The good economic times bring their own problems. Now that the economic cake is growing, its division is set to become increasingly contentious.

3. The big decisions

Lest any of our political masters felt they could sit back and relax, last week's document from Forfas, the industrial planning agency, set down an imposing policy agenda. The basic message was that, in the long term, continued strong growth cannot be guaranteed and that Ireland faces many challenges in building competitiveness, not least of which is the need to lower taxes.

The recent European Commission report on Ireland made a similar argument in a different way. It pointed out that it was the performance of foreign owned industry which was supporting Ireland's overall productivity the key generator of national wealth. But it signalled that much remains to be done to boost the productivity of home grown Irish business.

In setting policy, the task for the Government is to strike a balance between the conflicting demands for lower taxation and improved social services.

This dilemma is all the more acute because of John Major's drive to make Britain the "Hong Kong of Europe", with a low cost, low wage economy.

Ireland has signed the social chapter of the Maastricht Treaty which guarantees workers' rights, but our biggest competitor is moving in the opposite direction. A Labour government in Britain might, of course take a different view.

Meanwhile the single European currency scheduled to be introduced in 1999 looms large as the biggest economic decision for Irish policy makers in a generation. Qualifying for the single currency has become something of a symbol of economic machismo across Europe and, as of now, Ireland is well placed. But questions remain, not least how the economy might cope if Britain remains outside the system. In many respects, monetary union could represent a Hobson's choice.

Tying our economy to the rich centre of Europe presents the challenge of how to adjust to economic shocks or setbacks, as independent currency policy will be impossible and there will be little scope to adjust the national Budget. But staying out of the single currency would pose other risks interest rates could be higher and our political aspirations to be at the heart of Europe could be damaged.