US investment in Ireland last year surged to new highs according to official figurespicture-alliance / dpa

The last six months have shown small but significant signs that the Irish economy could be pulling itself off the canvas.

There was a slackening in the reduction of Ireland’s GDP in the second quarter, and this might hint at possible improvement in economic conditions.

Chief economist Rossa White of stock brokerage firm Davy told Reuters that while the Irish economy is not exactly getting back on its feet, it has started to wiggle its toes.

“It’s starting to show signs of stability after the collapse in the fourth quarter last year and first quarter this year,” he said.

However, before the country goes back to the Champagne Charlie days of the Celtic Tiger, chief economist at Bloxham Stockbrokers Alan McQuaid said in the same Reuters piece that the country has a long way to go.

“We’re still deep in the mire and the light at the end of the tunnel is a long way off, but at least it appears we’re moving in the right direction,” said McQuaid.

“Consumer spending is not as weak as it was in the first quarter, but a lot will depend on confidence. If consumers do get some good news, they will spend, but at the moment you’re looking at domestic demand remaining weak for the rest of the year.”

If confidence is the key then the Irish Government's presentation and delivery of their upcoming budget, forecast to be one of the most punishing in years, could have a lot to do with it.

Beleaguered Finance Minister Brian Lenihan has vowed to tighten the government's grip on spending as opposed to punishing the public with tax increases to help this fledgling confidence grow.

“The measures being taken by the government to maintain the public finances on a sustainable path and to resolve the banking are key ingredients towards returning the economy to positive growth," he said.