The economist who predicted the collapse of the Celtic Tiger is warning of more doom and gloom for Ireland in the near future.

Morgan Kelly, an economics professor at University College Dublin, has claimed that the country’s real banking crisis has yet to develop.

Credited as the first economist to predict the banking disaster that led to the economic collapse in Ireland, Kelly has warned of another imminent crisis.

The Irish Times reports that Kelly has said that the ‘real crisis’ for the Irish economy has not yet happened.

He warned that with the advent of any effort to clean the Irish banks of bad loans to small and medium-sized enterprises, ‘we could be facing something really, really terrible, quite soon.’

Kelly told a meeting of the Economics Society at the university where he works that the small and medium sized enterprise sector provides most of the employment in the Irish economy.

He said that many companies within the sector were still struggling with debts from the property boom which they could not repay.

Kelly added that while he had no figures on the amount involved, he thought it could be in the region of $30 billion to $50 billion.

He said, “These businesses and their debts are an existential risk to the economy.

“But the problem of SME loans could be dealt with pretty easily by deciding which of them would never be repaid, and which of them might be repaid if they were restructured.”

In his address, Kelly stressed that the important thing would be to save businesses that provided employment.

The Irish Times reports that he also said that any effort to address the issue should be transparent so that society would know who was getting their loans reduced or restructured.

This, he said, would help guard against political interference.

Kelly also claimed that the policies being pursued by the European Central Bank under its current President Mario Draghi had stopped Ireland going through as much ‘cold turkey’ as would have otherwise have been the case.

He claimed the recent figures on increasing employment showed rapid growth had returned to the Irish economy.

He said: “The impact of the crisis has been shorter and a lot smaller than you would have expected when looking at what had happened in other jurisdictions.

“This is very, very surprising. It is a big puzzle. The reason for the miracle had nothing to do with Ireland but was rather to do with the ECB’s interest rate and bond-buying policies which meant the banks and sovereign governments were still able to access funding.”

The paper also reports on Kelly’s view that it was the nature of miracles that when you looked closer, they did not look so miraculous.

He said that banks across Europe, including Germany, were in difficulty and repeated stress tests had dodged the issue.

The pending test of the European banks might do so again, though it seems the ECB might be going to do ‘a trial run’ by implementing a proper stress test on the Irish banks he said.

The paper adds that Kelly is of the opinion that if there is a clean-up of the Irish banking system, there was the potential that a huge chunk of the Irish economy would be ‘wiped out in one go’ due to the importance of SMEs to Irish employment.