Crisis spreads to Ireland and Spain
THE malign effects of the euro crisis were felt in Dublin and Madrid yesterday as Finance Minister Michael Noonan said a long-promised return to the bond markets could be scuppered by the Greek crisis.
Spain's Prime Minister Mariano Rajoy also warned that it too could be frozen out of the markets as borrowing costs soar.
"We hope we'll get back into the markets at the back end of 2013 but we might not because there is such uncertainty in Europe now," Mr Noonan told a conference in Dublin.
The admission that we may be unable to borrow marks an abrupt change for Mr Noonan, who has consistently argued that we will be able to return to the markets and avoid another bailout.
Just four months ago, Mr Noonan told the Dail that it was "ludicrous to be talking about a second bailout". Two months later, he added that the economy could take off "like a rocket" next year.
On the bond markets yesterday, Irish borrowing costs rose for the second day. The "yield or interest" on five-year Irish government bonds made them the second worst performer in the European market.
The minister's warning came as the Central Statistics Office said the trade surplus fell sharply for the second month in a row in March.
It means imports are rising faster than exports and is a further sign that the crisis in the eurozone is hurting the local economy here.
The surplus of €3bn recorded in March was €600m less than that reported in February, adding to concerns about sagging export growth
"We still expect a marked slowdown in export growth in 2012," Davy Stockbrokers said in a report to investors.
Bank of England Governor Mervyn King lowered growth forecasts in our largest trading partner yesterday and raised predictions for inflation this year.
Weakness in the UK is bad news for many Irish exporters -- though they are being compensated in part by the current weakness of the euro.