If Ireland was a movie, then it would be titled, “The Fast and The Furious”. Inquiring minds are seeing that every day brings more Irish news. Now it is that a likely credit rating cut might be coming:
Moody’s today warned that it was considering cutting Ireland’s credit rating amid concerns that its economic recovery was running out of steam, coupled with the financial burden of the €50bn (£43bn) bailout of its crippled banking system.
Moody’s Investor Services said Ireland’s Aa2 rating would “most likely” be cut by one notch if the downgrade went ahead — a change that would bring its rating on the country in line with Standard & Poor’s and Fitch Ratings.
Last week Allied Irish Bank became the fourth bank to be nationalised by the Fianna Fáil-led government while Anglo Irish Bank, which is already owned by the state, is to be given another €7bn taxpayer-funded injection.
Irish finance minister Brian Lenihan has described the total bill to fix the country’s banks as “horrible” but manageable. The bailout is expected to swell Ireland’s deficit to 32% of economic output this year — the biggest in Europe since the second world war.
The country’s worsening finances have fuelled speculation that it might have to follow in Greece’s footsteps and tap the €750bn rescue fund set up by the European Union and International Monetary Fund at the height of the sovereign debt crisis.
Moody’s said its review, which would take three months to complete, was prompted by uncertainty over Ireland’s financial strength in the wake of the bailout. Higher borrowing costs in the bond markets since July, when Moody’s last cut Ireland’s rating, also make servicing the national debt more expensive.
Ireland is in meltdown mode.
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