DUBLIN: Ireland, for long accoladed as the Celtic Tiger, has officially moved into recession – the first economy within the fifteen nation euro-currency area to do so, according the Irish National Statistics Office.

Following a 0.3% contraction in the first quarter of 2008, Ireland's economy shrank by a further 0.5% in Q2, ending the nation's long-running boom.

Other Eurozone nations are expected to follow suit in the near future, predicts Julian Callow, Europe economist at Barclays Capital: "Italy will definitely be next, and probably Germany," he warned.

He attributes Ireland's economic woes to a "massive reliance on real estate".

Construction was 21% of GDP at its peak last year ... even worse than Spain (18%) and far worse than America (11%) at the height of the bubble."

Callow avers that Ireland had been hit harder than core eurozone states, dubbing it an "asymmetric shock", attributable to heavy reliance on the Dublin financial centre and trade links with the Anglo-Saxon world.

Banking and financial services make up 9.8% of Irish GDP, compared to 7.8% in the UK.

Capital Economics'Jonathan Loynes delivered the coup de grace to the Tiger.

"The Irish boom has well and truly turned to bust. We now predict that Irish house prices will fall by 30% from peak to trough, but even bigger falls are perfectly possible."

Should this come to pass it would impose severe strains on the Eurozone's banking system.

Concerns have already arisen following the Bank of Ireland's warning that it would slash the dividend by half and is "battening down the hatches to increase capital".

Data sourced from Telegraph.co.uk; additional content by WARC staff