ECONOMICS:IN ANY situation at any time, risks abound. That is the nature of our world.

Almost exactly five years ago, journalist Richard Curran warned of the risks of a property crash in his Futureshock television documentary. He was rounded upon. Scaremongering was one of the many charges levelled against him.

In his programme, Curran merely outlined the large and inherent risks of massive credit expansion and property price rises. He was not scaremongering.

But half a decade ago, talking about risk had become anathema. To the blind, the ignorant and the complacent, Ireland was invulnerable. For such people, anyone who raised the possibility of the good times ending badly was engaged in scaremongering.

Many of those who want Irish voters to reject the European fiscal treaty at referendum are behaving just as Curran’s critics did five years ago. They label as scaremongers those who warn of negative consequence if the treaty is rejected and claim that Ireland is invulnerable to any ill-effects of a No vote.

It is astounding, after everything that has happened, that people can be as blithe about the risks facing everyone in this State.

The biggest foreseeable risks are: a break-up of the single currency; the ejection of Ireland from that currency union; a collapse of the Irish banking system; a Greek-style sovereign default (while remaining in the euro); and a much bigger fiscal adjustment owing to a lack of additional bailout funds. A rejection of the treaty will increase the probability of all of these things happening to varying degrees.

Start with the gravest risk – a collapse of the euro. If Ireland rejects the treaty, it would send yet another signal of the incapacity of the European political system to address the enormous challenges it faces.

A rejection would also highlight the obstacles to putting in place the much more profound changes needed if the euro is to survive. Those changes will require amendment of the EU’s basic treaties. Such changes need unanimity among the bloc’s 27 members.

If Irish voters reject the fiscal treaty, after having rejected two previous treaties at first asking, the most obvious conclusion is that they will shoot down future change.

A rejection of the treaty by Ireland would certainly not break the euro overnight, but it would lessen the chances of the currency holding together.

The second-biggest risk is ejection from the euro. If Ireland becomes part of the problem rather than part of the solution, the probability of being pushed out can only rise. Rejection of the fiscal treaty would be problematic, as outlined above.

Under what circumstances could Ireland be ejected? The answer: at the same time as Greece. Thus far, the most compelling reason for not cutting Greece loose has been the risk that any unpicking of the single currency would start an uncontrolled unravelling.

A possible solution is to shrink the euro zone in one go, removing all the weaker links at the same time. If Ireland were to become politically problematic by rejecting the treaty, having been economically problematic for some time, the case for ditching it along with Greece would be much stronger.

The third risk is a collapse of the banking system. It is closely correlated with the second risk. The greater the probability of a new currency being launched in Ireland, the greater the flight of capital out of the State. If capital flight were to be sufficiently great, the banking system would collapse.

The fourth risk – sovereign default – would likely be least affected directly by a rejection, as there is a shared collective interest in avoiding another such default after the multiple knock-on effects of Greece’s debt writedown.

But that does not mean that a rejection of the treaty would not increase the fifth risk – of greater austerity. A rejection would reduce the chances of escaping the current three-year bailout while at the same time lowering the chances of an extension of official funding along current lines.

Following a No vote, it is very unlikely that creditor countries would go out of their way to reward such rejection by setting up new mechanisms tailored just for Ireland. A treaty rejection would make the terms of any new bailout more onerous.

On the basis of risk analysis alone, the case for ratifying the treaty is compelling.