The economy is headed over a cliff, unemployment is soaring, output is crashing, people are fleeing the country and the government is still in denial.

With the latest ESRI quarterly commentary forecasting the sharpest economic contraction ever next year, the government's latest proposals to "revive" the economy are pitifully inadequate.

Coming on top of the dreadful October retail sales figures, which were published earlier this week, the ESRI's updated 2009 forecasts show that the recession is now officially over. We are now entering a full-scale depression.

In its latest quarterly economic commentary, the ESRI forecasts that the economy will shrink by 4.6pc in 2009, unemployment will rise to more than 10pc of the labour force and 50,000 people will leave the country.

If the ESRI's forecasts are accurate then the economy will shrink by the highest percentage ever recorded next year.

Pessimism

What we are seeing unfold before our eyes is the economic equivalent of a train wreck. We are now entering an economic period unlike anything we have experienced since the early 1930s.

If the ESRI's forecasts are accurate, and all of the available evidence would seem to support its pessimism, then we are in for a 1930-style depression rather than a 1970s or 1980s-style recession. This is serious, very serious.

So what is the government doing about getting us out of this mess?

Unfortunately, it is now far too late to avoid the coming depression; in fact, we already in its early stages. What is now needed is urgent action to deal with the consequences of the mess we have created for ourselves and plot a way out of it. We are now paying the price for a decade or more of policy failures.

That's bad enough but the truly frightening thing is that the government still doesn't seem to grasp the gravity of the situation.

Almost three months on, the banking system still hasn't been recapitalised. It still has to repudiate the utterly ridiculous "national" pay deal with the public sector trade unions. We are still waiting for any acknowledgement that current levels of public-sector numbers and pay are utterly unsustainable, let alone any proposals to trim this bloated monster.

In other words, the government is in denial. Instead of tackling the deepening economic crisis head-on we have had a series of what can only be characterised as band-aid measures.

It started with the spending "cuts", which were no such thing, last July.

Then we had the deposit guarantee scheme that failed to address the banks key problem, their lack of capital, in September. October brought the 'Budget' that had already been overtaken by events when the Finance Minister delivered his speech to the Dail.

Yesterday brought yet another example of the government's wilful refusal to face up to the seriousness of the situation when it unveiled its much-hyped economic "renewal" plan, the centrepiece of which is a €500m fund for start-up businesses.

While yesterday's announcement will probably cause no harm, unlike many of this government's policies, and might even do some good, it doesn't get to grips with the underlying problems. It doesn't even come close.

crisis

Instead it represents a continuation of this government's refusal to admit to either itself or the Irish people the true extent of the crisis we are now facing. This refusal has long since passed the unwillingness to be confronted with bad news to which all long-standing governments are prone and has become something much more serious, a kind of economic autism.

We are all paying the price for this refusal to confront the new reality.

The widening VAT gap with Northern Ireland is destroying the retail sector.

The refusal to reform the public sector led to last October's counter-productive tax increases. The failure to recapitalise the banks means that banks are no longer lending.

I can only hope that you enjoyed the recession; the depression will be much worse.

- Dan White