Ireland's economic boom could be followed by one of the biggest busts the State has ever experienced, former British chancellor of the exchequer, Lord Lamont, has predicted.

This scenario is as likely to happen as the "soft landing" which Irish politicians believe will be the outcome, he claims.

He says Irish economic growth has been accompanied by "all the classic symptoms of a boom out of control" and that from the moment Ireland joined the euro, things started to go wrong. And he says some people believe Ireland may be the first state to leave the euro.

"From under 2 per cent, Irish inflation is now over 6 per cent, the highest level for over a decade and probably heading towards 10 per cent. The reason is that when Ireland joined the euro, it was forced to halve interest rates at a time when it should have been putting them up. The result was accelerating inflation," he says.

Lord Lamont is amazed that a situation where bank credit has been rising by more than 30 per cent and house prices by more than 20 per cent each year has proved surprisingly popular.

"The Irish Government can do little to control the situation because it cannot put up interest rates, which is what they ought to do," he says.

Lord Lamont believes the Irish economy was unique in many ways. It has greater mobility of labour than any other European economy, large-scale inward investment, the return of emigrants into the labour market and its ability previously to export some of its unemployment to Britain. He adds: "In passing, I cannot resist pointing out that the latter point might mean that it makes more sense to have a monetary union with Britain than with Europe."