Fitch downgrades Irish credit rating
The Irish authorities suffered a further setback today with news that Fitch, the credit rating agency, has downgraded Irish sovereign debt to A+. To add further insult to injury the rating is still on a negative outlook with the chance of a further downgrade in the short to medium term. This comes only hours after news that another credit rating agency has also placed the Irish credit rating on negative outlook with the chance of a further downgrade in the short to medium term.
We are getting towards the stage regarding the Irish economy when these downgrades have less and less impact because of the overall situation. While there is no doubt that the situation could get very much worse for the Irish economy and the Irish authorities it has brought to a head the situation and action will need to be taken in the short to medium term.
The Irish authorities are now caught in something of a pensive movement as the cost of sovereign debt continues to increase meaning that more and more finance will be required to fund interest payments on future debt. This will take away funding from the public sector budgets and unless the situation rectifies itself it will lead to further budget cuts.
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