I remember being castigated on another site (Slugger O’Toole) several months ago when I warned that the fundamentals of the Irish economy were all wrong and that economic disaster lay ahead. I took no pleasure whatsoever from saying this but I call things as I see them. So…
“Ireland was stripped of its top AAA credit ranking and downgraded to AA+ by Standard & Poor’s (S&P) yesterday while being warned that it could drop further if Dublin fails to get its public finances under control.
The former “Celtic Tiger” economy is the second eurozone country after Spain in January to lose its top ranking since the onslaught of the global downturn. Such a downgrade will increase Ireland’s borrowing costs.
S&P said the Irish Government had underestimated the scale of its fiscal problems and the agency dismissed the possibility of a solution emerging at an emergency budget next week.”
The budget next week is going to be crucial but the big question is how FAR can the Government go to rebalance without incurring massive civil unrest in such a highly unionised country?
Let me be clear; I want to see the Republic of Ireland prosper as I have many friends living there and I share their valid concerns for the economic future if their government calls it wrong.
I suppose an even more fundamental question for Spain and now Ireland is just how much longer can they afford to remain within the straitjacket of the Euro? If Ireland had control over it’s own currency, it could devalue right now and so stop some of the massive inflow of goods from Northern Ireland and beyond- which whilst good for the consumer is killing commerce.