Rating revision deemed 'pretty insignificant'
Published 26/08/2010 | 05:00
Goldman Sachs chief global economist Jim O'Neill has described Ireland's downgrade as "pretty insignificant".
"Germany could be entering a period of self-sustaining domestic demand," he said yesterday. "If that were true, it would be of major importance for the rest of Europe. Germany is a third of the euro area. Ireland is tiny, its downgrade is pretty insignificant."
German business confidence unexpectedly rose to a three-year high yesterday, driven by a jump in retailer sentiment.
"What is coming through more and more is evidence of improving domestic demand," Mr O'Neill said. "It's been such a long time since the German consumer has been spending. If it were for real, it's going to turn out to be major."
Mr O'Neill said a spate of "disappointing" US economic reports may prompt the Federal Reserve to embark on a fresh round of quantitative easing.
Recent reports on jobless claims and manufacturing point to slower growth in the world's largest economy. Figures showed that sales of existing houses plunged by a record 27pc in July.
"If we carry on with data like this, yes, it's coming . . . by October for sure," Mr O'Neill said, referring to quantitative easing.