UNDER Ireland's austerity plans, tax rises and spending cuts worth a cumulative €30 billion ($41 billion), the equivalent of 20% of a single year's GDP, will be imposed over the seven years to 2014. Pay and welfare cuts, as well as higher taxes, have all taken their toll on output. House prices have fallen by 43% from their 2007 peak. A year ago the cost of rescuing the banks forced the government led by Fianna Fail's Brian Cowen to seek a European Union/IMF bail-out worth some €85 billion.

After this it was no surprise that Mr Cowen lost February's election to Fine Gael's Enda Kenny. Mr Kenny now heads a centrist coalition with Labour that has Ireland's biggest-ever parliamentary majority. He hopes that Ireland will be the first to exit its EU/IMF bail-out programme, ahead of Greece and Portugal. By 2015 he aims to have cut the budget deficit to under 3% of GDP.

The country's painful fiscal adjustment has, so far, been accepted by Irish people with surprising stoicism, despite a rise in unemployment to 14%. The current account swung back into surplus last year; unit labour costs have fallen sharply. Mr Kenny is not short of advice on what to do next. Ireland's central bank, the OECD and a new Irish fiscal council all have a similar idea: to cut the deficit faster than the EU/IMF programme requires so as to regain market credibility. Ireland could then make an earlier return to the sovereign-debt market.

Since July 21st, when EU leaders cut the interest rate on the Irish bail-out, the spread between Irish and German ten-year bonds has shrunk by almost half. The fiscal position has improved: tax rises and spending cuts are on target to produce a budget deficit of 10% this year; still high, but a big drop from last year's 32%. And the economy, unlike Greece's or Portugal's, is visibly on the mend—indeed, the central bank has just raised its 2011 growth forecast.

Yet there are big risks ahead. Ireland remains almost entirely reliant on exports, with domestic demand, notably in construction, at best flat. A global slowdown would slash growth, making it harder to stabilise the public debt, which is expected to peak at 120-125% of GDP in 2013. Amid uncertainty over a possible restructuring of Greek debt, this could be a huge problem. A bigger-than-expected Greek write-down would invite speculation that Ireland and Portugal will follow suit. The government fears that it might then lose the gains it has so painfully made. Ireland sees a glimmer of a chance to escape from being bracketed with southern euro-zone countries known by their initials as the PIGS. But it is not out of the sty yet.