Protest and political strife - Inside Europe's fastest growing economy

By Padraic Halpin

DUBLIN (Reuters) - Fergus Reynolds has supported Ireland's governing Fine Gael party for 43 years, but this week he joined tens of thousands of people to march against them and pledged never to vote for Prime Minister Enda Kenny again.

Since taking voluntary redundancy five years ago, the 62-year-old former bank worker's income has been stretched by a new pension levy and a property tax. When his son-in-law lost his job, he began to help pay his mortgage as well as his own.

This is what much of the fastest-growing economy in Europe looks like at the end of 2014 as post-austerity Ireland serves a timely reminder to the rest of the euro zone that the bloc's stark period of budget balancing is not without consequence.

"I've taken a 125 euro a week of a drop with all the cuts. A week! That's 6,500 euros per year. I'm not paying anymore, I've had enough," said Reynolds, who grew up in the same county Mayo town and went to the same school as Kenny.

"I don't know where this country is going to go. If I was 20 years of age, I'd be gone. The water was the last straw, I'm so angry I'm nearly lost for words," he said, referring to the growing protests against new water charges.

A year after becoming the first euro zone country to exit an EU/IMF bailout, Ireland's economy is set to grow by almost five percent, unemployment has fallen by close to a third in just two years and a budget deficit that a banking crash ballooned to a third of the size of the economy in 2010 will drop below 3 percent next year.

It's a turnaround that is making the rest of the otherwise ailing euro zone jealous, German Finance Minister Wolfgang Schaeuble remarked during a recent visit to Dublin.

But after seven years of tax hikes and spending cuts - which took 30 billion euros or about 20 percent of annual output out of the economy - a frustration that appeared absent though much of the crisis has suddenly boiled over.

This week's third day of mass protest - the biggest opposition movement since the crisis erupted - was as much to do with the cumulative impact of higher taxes and the drain of rising mortgage, rent, insurance and childcare costs as it was about the last piece of a long austerity drive.

"DISGRACEFUL"

For Debbie, who marched with her husband, 16-month and 3-year-old children, the scale of the cuts Ireland has been praised for implementing around Europe became clear when she could not afford to keep working and have a second child.

The high cost of Irish childcare has been highlighted by the European Commission as a significant barrier to parents being able to work and avoid the risk of poverty. Crèche fees would have eaten up 1,400 euros of Debbie's 2,300-euro monthly pay. Another 600 euros would have been needed to put petrol in her car.

"I could work and we could live below the breadline or I could give up work and we could live just above the breadline," she said, declining to give her surname.

"And we're in a lucky position compared to other people. I've had family emigrate because there are no jobs here. They're in Canada, can't afford to come home and I can't afford to visit them. It's disgraceful."

Kenny had hoped plans to cut income tax from next month - the first reversal of austerity - would boost his 2016 re-election hopes but with average wages still falling and costs such as public transport rising, the introduction of water charges has undermined those efforts.

A government-funded think tank has said household incomes of lower paid workers will fall by one percent next year, on top of budget-related losses of 13 percent since 2008. Higher earners, whose incomes have fallen over 15 percent, will make a slight gain, the Economic and Social Research Institute estimates.

As a result, Kenny's party slumped to third place behind left-wing Sinn Fein in a recent opinion poll, hitting an 11-year low amid a surge in support for independents that raises the prospect of a rare political deadlock.

With further protests planned for January, that frustration at feeling no effect of a recovery people are hearing so much about will be a central theme to early 2016 elections.

"You hear all the time about how things have gotten better and we need to clap ourselves on the back but people have seen through that, it hasn't trickled down," said Brian Hanley, 45, who is among the more than one in ten still out of work.

"There's no comfort, you're never relaxed. You're always looking at the next bill. We're absolutely pinned to the collar."

(Editing by Toby Chopra)