The Irish debt crisis, straining the eurozone with a second storm in six months and testing an EU rescue system to the limit, appears similar to the Greek crisis but Ireland has far stronger prospects, analysts say.

Unicredit bank chief economist Marco Annunziata said that in the view of the markets, it is the same crisis which had not been resolved and had now returned.

The chief economist at Commerzbank Joerg Kraemer commented that the crisis over Ireland was “of course similar” to the Greek crisis “so far as there was a significant risk that Greece would ask for support and now there is a significant risk that Ireland may ask for support within the coming three months.”

He added: “The amount of fiscal consolidation needed is quite similar between the two countries. Both countries face the similarity of this huge need of cuts in deficit.”

However, he also argued: “But there’s a huge difference: in contrast to Greece, Ireland is a flexible Anglo-Saxon economy, with a flexible labour market.”

Ireland is heading for a public deficit this year of about 32 per cent of national output.

This is far higher even than the Greek deficit owing mainly to the costs of rescuing the property-stricken Irish banking sector and taking responsibility for near worthless assets on the banks’ balance sheets.

The Greek crisis, as acknowledged by the Greek government, was the result of deep, long-standing structural weaknesses throughout the economy which sweeping reforms are now intended to address.

Although Ireland insists that it has funded state finances until the middle of next year, the overall landscape of Irish finances has raised the alarm on financial markets to a pitch which is shaking the entire eurozone framework, focusing attention also on another weak member, Portugal.

In the background, there is a shadow of concern that such contagion could even spread to eurozone member Spain, a far bigger economy being the fifth largest in the European Union, although the Spanish government has stressed that its economy is a quite different and healthier case.

At the Bruegel think tank on European affairs, director Jean Pisani-Ferry said: “Dublin was in general a good example of economic performance before the crisis and it has a much better record in controlling public finances than Greece.”

Ireland had a strong capacity to export which also gave it good prospects of bouncing back.

And, most importantly, its deficit was largely temporary since it arose from rescuing the banks.

Mr Kraemer also observed: “The big difference between the two crises is that the Greek crisis led to the introduction of a bailout mechanism which is now in place.”

After Greece had been rescued, tension on the eurozone government debt market had eased, but then rose again because investors who had bought debt in the weaker countries were not sure that they would get their money back, despite the mechanism, he said.

This rescue system, set up by the European Union and International Monetary Fund, has created a safety net totalling €750 billion to help eurozone countries if deficit and debt problems become dangerously acute.

Mr Annunziata said that in contrast to months of uncertainty over the fate of Greece, it was now clear that if necessary Ireland, and even Portugal, would be saved by their partners.

This might calm the markets “temporarily”, Mr Annunziata said, but if the safety net were used, the different nature of the problem in Ireland should be taken into account since Ireland did not need new funds until the middle of 2011 whereas its banks were suffering from a crisis of confidence.

Mr Pisani-Ferry took a similar line: “It’s necessary to make a good diagnosis to apply the right medicine,” he said. “This is not the Greek crisis, and the Greek medicine must not be applied.”

The economists said that the outcome might be a flexible arrangement to help the Irish banking sector. This might calm the Irish crisis without providing a permanent solution to the crisis for the eurozone.

Mr Annunziata warned that the real question on the markets was what would happen in two years’ time when support programmes ended. Would it be possible to avoid a restructuring of debt, as EU leaders argue, he asked?

Mr Kraemer warned that the markets were showing “scepticism as far as the long-term sustainability of the bailout mechanism is concerned.”

And the rescue system was also “very unpopular” in countries which had to pay the bill, he said. “Therefore, markets test the long-term sustainability of such a mechanism.”

He added: “There is nothing to be happy about if a country asks for support from other states. This is a dramatic event which is not positive.

“Everybody should encourage Ireland to try to fix the problem by itself as support from other countries only buys time.”