THE expert who predicted the property crash has warned that a banking project could shut many small businesses.
Professor of economics at UCD Morgan Kelly said many firms would be forced to close their doors if the European Central Bank (ECB) pressed ahead with a "clean-up" of Irish banks.
He claimed that the Frankfurt-based ECB planned a "trial run" in Ireland in which it would take action against the banks' distressed loans.
Prof Kelly said that if there were any such project, a lot of small and medium enterprises would "go under".
And he claimed Ireland could be facing something "very horrible quite soon" and that a "big chunk of the Irish economy could be wiped out in one go".
"This is a potentially enormous problem that nobody seems to care about," he added.
David Hall, of the Irish Mortgage Holders Association (IMHA), backed the claims and said there would be a devastating effect on employees and the wider economy if businesses went to the wall.
"We have many people with us in the IMHA who have staff and workers going around the factories and shops thinking everything is good and that they are busy, not realising that their owners are being sucked dry by banks," he added.
"A day of reckoning will come – and that may be very soon."
But despite criticising the ECB, Prof Kelly said its head Mario Draghi was behind the recent improvement in our economy – not the Government.
"The ECB has basically kept pumping that sweet, sweet credit into our veins and we haven't had the real crisis yet," he told students at a question-and-answer session at UCD.
But Social Protection Minister Joan Burton appeared to reject claims that the small business sector faced a dire future.
Speaking on RTE's The Week in Politics, Ms Burton said she would have to be convinced that there had been a change of policy at the ECB.
She said ECB boss Draghi's promise of a bond-buying programme had staved off the eurozone crisis, and that there was no absolutely no reason for him to move away from his overall approach now.
The minister added she hoped Prof Kelly had been erring on the pessimistic side.
SEE ANDREW LYNCH, PAGE 14