When the new Irish budget is hailed as the toughest in the history of the state, this is no mean boast; Ireland actually cut pensions as well as teachers' pay in the austere 1920s. Last Thursday, pensioners went relatively unscathed, but child and unemployment benefits were slashed and teachers suffered like their great-grandparents. The main targets were public sector workers, whose salaries were savagely cut on a rising scale. Even the lowest-paid will lose at least 5% of their income, and the highest-paid 15% – these cuts following on previous levies since the unravelling of public finances began last year.

The elements in Irish society who contributed most to that degringolade were bankers, property developers and Fianna Fáil politicians, linked together in a steamy and incestuous embrace. The bursting of the property bubble exposed the hopeless state of the banks – particularly Anglo-Irish Bank, which had grown like Jack's beanstalk, manured by the crazy spiral of property "investment". Its directors practised systematic deception of shareholders and mind-boggling doctoring of accounts, awarding themselves hundreds of millions of undeclared loans. None of this has been denied; more extraordinarily, much was known at the time to the government's supine so-called regulator. When Sean FitzPatrick of Anglo-Irish was finally forced to resign a year ago under all sorts of accusations of crookedness, the best that Brian Lenihan, the finance minister, could express was "disappointment".

There will be more than disappointment among the Irish nurses, teachers, civil servants and junior lecturers who are taking the brunt; but the banks are on the floor and the property developers are desperately fighting off the spectre of bankruptcy as their Brobdingnagian loans are called in. Dail deputies are targeted to a modest extent, sharing in the cuts to public sector pay. Those (including non-residents) with incomes over a million are being levied €200,000 apiece, but this is generally agreed to be window-dressing, and income-tax bands remain unchanged. If the rich are not being heavily soaked, this may be because they are now hard to find.

And yet only a decade ago there seemed to be so many of them. As recently as 2007, a Bank of Ireland survey presented the picture of 33,000 Irish millionaires and €800bn of domestic wealth sloshing around the country. But the super-elite of the very rich constituted a tiny number. Those who qualified as comfortably well-off have seen the values of their shares and houses decimated, and their children start to look abroad for jobs once more. Meanwhile, inward investment has disappeared, factories close all around, and the Potemkin villages thrown up by fly-by-night builders manipulating sleazy planning permissions are beginning to decay untenanted. Is Lenihan's budget the confirmation of the post-Celtic Tiger hangover?

Fianna Fáil has certainly woken up with a headache. The taoiseach, Brian Cowen, who as minister for finance under Bertie Ahern connived at vast tax incentives for friendly builders, now sees his own salary cut by 20%. Ahern himself has had the gall to hint publicly that things were all right on his watch: considering he had to be practically railroaded into resignation in the aftermath of a slew of financial irregularities in his personal accounts, this is – so to speak – rich. Ahern, who apparently did not keep a personal bank account, relied on what were inelegantly termed "dig-outs" from moneyed friends. What or who will dig out the national finances now?

In previous economic crises, utter disaster has been averted by cross-party consensus on the need for hairshirt economies, and a kind of grim public acquiescence. Despite looming industrial action, there are signs that this may also be the case now. But what remains of the years that the locust has eaten? Ireland, if poor again, is still younger, sharper, less deferential (particularly to the Catholic church) and more entrepreneurial. While boom governments scandalously ignored the health service and secondary education in favour of "prestige" projects (more building), the arts and third-level education benefited, and these dividends may continue. The government may have to rediscover Swift's dictum that the wealth of a country is its people. How far the "people" forgive the government for the way it has treated them remains to be seen.