Euractive have a very interesting article on the talks between EU Economic Commissioner Olli Rehn and the Irish Government and Opposition.
“He asked us our view and I told him […] we had no confidence in this government, and the thing that would give more stability to the country is an election and a government in place that had a significant working majority,” said Michael Noonan, finance spokesman for the centre-right Fine Gael party
This of course means the markets are jittery about Ireland. Will Fine Gael stick to the 4 year plan to reduce the deficit if they win the election? Will Labour? This worry and the Portuguese Debt Auction has sent “the risk premium on Irish and Portuguese bonds to record highs and prompting market talk of European Central Bank (ECB) intervention.”
This is worry news indeed.
The Irish yield spread over benchmark German bunds reached a record peak near 574 basis points in late trading. The 10-year Portuguese/Bund spread also hit a euro lifetime high of 466 basis points and traders said the ECB had been buying bonds.
Credit ratings agency Fitch Solutions said the cost of insuring Irish and Portuguese sovereign debt against default had widened by 24 and 22% respectively compared to the sovereign debt market average in the last week.
Commissioner Rehn is still thinking positive though, he told RTÉ
“I believe that the markets have not yet internalised this plan and these decisions because they are still at the planning stage,” he said. “Once they have been decided by the government and passed by the parliament they will have a real effect, and then the market forces [will] believe that Ireland is able to cope.”
I personally hope that he is right. Next months Budget is going to be make or break, not just for the Government, but for the country as a whole. There is no doubt that cuts and taxes are coming, and a few holy grails will have to be given up, but can we accept that as a country? Will we protest on the street like the Greeks? Or will we grin and bear it?
The next four years are going to be tough. Can we make it? I hope so, but we need political will and not political point scoring.
- UPDATE 1-Irish opposition want election not budget consensus (reuters.com)
- EU fails to forge Irish budget consensus (reuters.com)
- EU Rehn: No Doubt Ireland Will Overcome Current Crisis (forexlive.com)