An annual controversy over Fairytale of New York is a Christmas tradition now, right up there with the Winterval "we can't call it Christmas any more" fake controversy.
But while it might be an Americanism, it was definitely being used by UK singers back then as an insult for gay men too. Look at these lyrics from Dire Straits from 1985:
"See the little faggot with the earring and the make up
Yeah buddy that's his own hair
That little faggot got his own jet airplane
That little faggot he's a millionaire"
To be honest, I probably first heard the word 'faggot' in Fairytale of New York, so I always assumed it was just a normal insult and didn't associate it to homophobia until much later when I saw American stuff using it in that way. I've had a look, but I can't really find any reference to it being used as an insult for a lazy man in Irish slang, other than in comments from people defending this song. The only other definition I can find is on Urban Dictionary, referring to a slatternly woman, which apparently is an older definition. But to my knowledge, Shane MacGowen has never claimed it isn't a homophobic slur, just that this is the character. He's also said this year that he doesn't care whether it's censored or not.
McGowans full quote
“The word was used by the character because it fitted with the way she would speak and with her character”, he said. “She is not supposed to be a nice person, or even a wholesome person. She is a woman of a certain generation at a certain time in history and she is down on her luck and desperate”.
“Her dialogue is as accurate as I could make it but she is not intended to offend”, he went on. “She is just supposed to be an authentic character and not all characters in songs and stories are angels or even decent and respectable. Sometimes characters in songs and stories have to be evil or nasty in order to tell the story effectively”.
However, he added: “If people don’t understand that I was trying to accurately portray the character as authentically as possible then I am absolutely fine with them bleeping the word, but I don’t want to get into an argument”.
tbf I say a relative has used it and he could have been using it as a gay slur, but usaully the words bone idle were before it so never thought of it as used in homophobic sense, and they haven't said it for years.
But that's language for you, to go to the extreme example It's like all these yanks on social media decrying Cùnt, it has been in old english and is in shakespear, was alway a curse that was multi use like bollocks and bloody (though more offensive) yet in america it is a particularry nasty slur against women and so the american twitterverse gets up in arms anytime someone from the UK, Oz, Canada, NZ use it, where though bad is not seen in the same perspective.
Bollocks, wanker, tosser etc can be in scripts aired on american telly on shows , where here they cannot pre watershed, that's the beauty of language, it evolves and censoring it in art, literature, song from previous generations because we deem it offensive now is a load of bollocks imho.
The exeption are people who purposely write offensive songs, with the intent to stir shit or propergate hate, those should be censored or banned.
Context is everything and in the song the context isn't homohobic, but a wifes rant at her drunken husband.