The Irish Times has some of the political reaction to the increasing cost of the Irish state’s borrowing following Standard & Poors decision to downgrade Ireland’s credit rating to AA-. And a BBC report notes
S&P cut the rating one step to from AA to AA-, its lowest since 1995.
This follows clearance earlier this month for an additional injection of 10bn euros into Anglo Irish Bank.
The agency now forecasts that net government debt – the sum of all borrowing – will rise to 113% of GDP in 2010. That would be a substantial increase on the 64% level recorded in 2009.
It would also make it one of the highest in the eurozone and well above its projections for Spain (65%) and Belgium (98%).
The rating could be cut again if the costs of the bail-out rise or the economic recovery becomes more sluggish, S&P warned, but could rise if the position unexpectedly improves.
And on that rising cost of borrowing, The Daily Telegraph‘s Ambrose Evans-Pritchard argues
Dublin has played by the book. It has taken pre-emptive steps to please the markets and the EU. It has done an IMF job without the IMF. Indeed, is has gone further than the IMF would have dared to go.
It has imposed draconian austerity measures. The solidarity of the country has been remarkable. There have no riots, and no terrorist threats.
Yet as of today it is paying 5.48pc to borrow for ten years, or near 8pc in real terms once deflation is factored in. This is crippling and puts the country on an unsustainable debt trajectory if it lasts for long.
Yet Greece is able to borrow from the EU at 5pc and from the IMF at a staggered rate far below that (still too high for the policy to work, but that is another matter). These were the terms of the €110bn joint bail-out.
To add insult to injury Ireland is having [to] SUBSIDIZE Greece to meet its share of the rescue fund.
Ah, but Brian Cowen is a seriously respected world leader…