As the media and political system obsessed with the question of Irish sovereignty, late last year, in one area at least we were still in control of affairs, and running them well.

Irish theatre had a good year, one of the best in my time covering it.

Theatre companies responded to more difficult circumstances with imagination and defiance. And audiences reciprocated.

Budgets may be down, but audiences do not appear to be. Even during the prolonged ice-cold spell in November and December, new plays opened in Dublin to decent houses.

On evenings when those with normal jobs were abandoning them to skate home before dark, the city’s actors were sliding into work, to be warmly rewarded by enthusiastic punters.

While the political and economic crisis left most of us struggling for words, these actors found words to articulate more enduring crises: those of the heart, of faith, of identity.

It was good, on those nights, to sit in warm theatres and be beguiled by their comedies and tragedies. The alternative was the tragicomedy played out nightly on Vincent Browne’s tv show, but that was more scary, and offered less prospect of satisfactory resolution.

It was a year of resilience and enterprise in Irish theatre. The Arts Council attracted criticism for the rather brutal way in which it administered cuts, deciding to cut some companies’ funding altogether rather than sharing the burden.

Their Darwinian approach was out of kilter with the heretofore prevailing spirit of collegiality in the arts in Ireland. It was cruel, but it was efficient and it was effective. There had been a general malaise in the independent theatre sector.

A phalanx of thrusting young companies that emerged during the 1990s had calcified during the boom years. Regular funding had left them more reliant on Arts Council approval than on their audiences.

There was a sense that Irish theatre was largely talking to itself, happy to agree with what it said.

Recent years have seen a dramatic shift in this status quo, with the emergence of a new generation with the fire that had previously characterised that of the 1990s. A number of key power brokers saw this, and have responded.

Fiach Mac Conghail at the Abbey, Michael Colgan at the Gate, Lynne Parker of Rough Magic and Willie White at the Project Arts Centre have each been quick to spot new talent and to give it opportunity.

And the talent has responded – on its own terms. Wayne Jordan went from directing O’Casey at the Abbey to staging a musical allegory for the financial crisis in the tiny Project Cube; Tom Creed juggled establishment jobs with his own projects without compromising either; Grace Dyas and THEATREclub made an audacious bid to take over Dublin’s Fringe festival.

At the Fringe, Róise Goan, herself one of this young generation, has fed the fire in the bellies of these young Turks – as have William Galinsky at the Cork Midsummer Festival, and Loughlin Deegan at the Dublin Theatre Festival – making space for, and placing faith in, young theatre makers with brilliant ideas.

The Arts Council has responded, too. It has changed its funding structures to make more room for emergent voices. And its cuts are forcing established voices to be proactive in the search for audience.

This new spirit of “enterprise” was the dominant theme of the year.

The Abbey responded to a shortage of funds by opening the space to other companies and other performers. Jimmy Fay’s Bedrock Theatre Company came together with the Project Arts Centre and the Civic Theatre to bring a lively version of The Colleen Bawn on tour. Rough Magic cast an American star in an Irish classic in a bid to make good theatre for as large an audience as possible, at the Gaiety.

Dublin’s Fringe Festival took the city as its stage and sought new audiences in new places. Karl Shiels saw the need for a new theatre in Dublin, and installed one above a pub: it didn’t last, but the Theatre Upstairs is due to return in the new year. And Bewley’s Café Theatre collaborated with two British companies on an ambitious exchange programme, in a co-production arrangement that could provide a model for Irish regional theatres.

With leaders like these, theatre will weather the recession well. And at their vanguard is the theatre that made the most audacious, and successful, bid for a new audience this year: the Grand Canal Theatre.

Theatre of the year: the Grand Canal Theatre

In the face of the steepest recession in recent European history, an extraordinary 330,000 people attended shows at the Grand Canal Theatre in this first year of its operation. So why are audiences flocking to its West End imports (as they do to amateur plays around the country)? Because they’re fun. Theatre sector: take note.

Runner up: the Abbey Theatre

The Abbey held a mirror up to Ireland this year. New directors, new genres (documentary; lecture; conversation; concert; cabaret) and new companies all helped make it more agile and responsive than it has seemed in years.

Company of the year: Rough Magic

Rough Magic’s success this year was more pragmatic than artistic, but it was considerable. Their venture into the Gaiety with Stockard Channing and Earnest was an inspired gamble, which helped to pay for the artistic gamble of Sodome, My Love (see below). And their Seeds programmes and support for younger companies have given a launch pad to this new generation.

Best play: Weaving the Cry

On the encouragement of a friend, I slipped into an artists’ studio off Thomas Street in March to see a play by a company with a profile so low as to be almost invisible, Aiden Condron’s Nervousystem. It was a loose adaptation of Synge’s Riders to the Sea, with a cast of four, and it was utterly beautiful. Condron and his ensemble cast train constantly, and the result was an immediacy and integrity I saw nowhere else last year.

Best actor: Harris Yulin

I had decided that Arthur Miller’s plays were tired and emotional; dated and overwrought. But Harris Yulin’s Willy Loman at the Gate reminded me why Miller is a great playwright, and why acting is a great art. His was a remarkably gentle performance, content to let the tragedy seep out, and the tragedy seemed all the greater for it.

Best actress: Olwen Fouéré

Fouéré found, translated and performed Sodome, My Love, by French writer Laurent Gaudé. In Lynne Parker’s seamless production, she was beguiling and bewitching.

Best director: Gavin Quinn

Quinn’s playful deconstruction of Hamlet in the Dublin Theatre Festival – called The Rehearsal, Playing the Dane – started with a lecture, included an audience vote, and starred schoolboys in a key scene. It may have been wholly irreverent, but it was deeply respectful and surprisingly moving.

Most innovative project: The Trailer of Bridget Dinnigan

Dylan Tighe worked with Catherine Joyce and a group of Traveller women from Blanchardstown to adapt Lorca’s The House of Bernarda Alba, and gave it a full-scale production in the Project Arts Centre. The result was a play of rare social insight. It should be taken all round the country.