Business Irish

Thursday 19 September 2019

'No deal' fears put jitters on Irish bonds

(stock picture)
(stock picture)

David Chance

The rising risk of a "hard Brexit" has pushed the interest differential between Irish 10-year bonds and their German equivalent to the widest level since mid-2017, according to the National Treasury Management Agency (NTMA).

The increased spread to 65 basis points was due to "investor concerns over Brexit-related developments are the dominant factors" in financial markets, the NTMA said.

Ireland is more exposed than any other country to the fallout from Brexit and the International Monetary Fund warned recently that Britain leaving the European Union without a deal would cut 3 percentage points from potential growth.

The jitters on financial markets could amplify the effects of Brexit on the economy here, raising government borrowing costs, although interest rates are unlikely to rise quickly in the eurozone.

Ireland is also in decent fiscal shape and the ratio of debt to gross domestic product is set to fall 64pc by the end of this year from a peak of 119.5pc in 2013. Interest costs on the debt have fallen to 12pc of tax revenues from a high of 19.4pc.

Irish Independent

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