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Ireland has turned a corner. No, really - S&P

Ratings agency Standard & Poor’s says the Irish economy will be quicker to recover than other European systems.

Image: Niall Carson/PA Archive

IRELAND’S ECONOMY has “turned a corner” and will be able to recover from the global financial crisis quicker than those of other European countries, according to ratings agency Standard & Poor’s.

David Beers, who is the agency’s chief economist, told a summit of World Bank and IMF bankers in Washington that Ireland was taking commendable measures to improve its economic competitiveness.

“Ireland’s competitiveness is improving because the labour market is flexible; they’re cutting wages and salaries. So we think that among the peripheral countries it would be the first to begin to recover.

“People think that the Irish political establishment may be suffering from exhaustion, reform fatigue. We actually do not detect that.”

Ireland was also likely to benefit from having a more flexible private sector, and a low corporation tax rate to attract higher levels of foreign direct investment.

The comments come less than two months after S&P downgraded Ireland’s national credit rating, adjusting its outlook for the Irish economy to ‘negative’ – a move that saw Ireland’s international cost of borrowing rise sharply.

At the time, the National Treasury Management Agency criticised the move, citing a dangerously pessimistic forecast of the total cost of the banking bailout – which it put at €50bn.

S&P has also cut the credit ratings of AIB and of Bank of Ireland within the past month.

They also come, however, as the future of the talks on creating an all-party forum to propose a four-year budgetary strategy remains up in the air, and with the government considering up to €4.6bn in cuts in this December’s Budget.

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Gavan Reilly

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