Ireland’s ailing economy, along with related closed-end fund (CEF), is being carefully nurtured by the government. But at what cost?
After an increase in government spending, Standard & Poor’s downgraded the country’s long-term sovereign credit rating to “AA” on concerns of a costly government bailout of banks. Further downgrades are also possible if the government’s fiscal performance continues to weaken, according to The New York Times. Rival credit rating agencies, Moody’s and Fitch, have also downgraded Ireland’s debt.
The downgrade could translate into higher interest rates for the country as investors would demand more from riskier government bonds.
In a report released by the University of Ulster, economists advised the government on the merits of public investment so as to provide social and economic benefits during a recession, as stated in Belfasttelegraph. It is thought that the potential boost in job creation is justified by the increased investments.
However, there is some good news provided by the Ulster Bank, which said the local economy is shrinking at its slowest rate in a year, which further supports the idea that the worst could be over, reports Symon Ross for Belfasttelegraph. But Northern Ireland’s economy is still under-performing that of the rest of the United Kingdom’s and the weakness seems to be stemming from the construction sector.
- New Ireland (IRL): up 39.7% year-to-date
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.