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FINANCIAL markets are relatively upbeat about Ireland's prospects, a new report on the Irish economy from Barclays has said.

The confidence comes from the country's assiduous implementation of reforms, both before and under the EU/ECB/IMF programme, the report said.

It said though, that despite good progress to date, the road to recovery is long and unlikely to be easy.

It also said while the banks may now be well capitalised, they are unprofitable and continue to rein in credit.

Property prices are still falling, arrears increasing, unemployment high and external demand weak, and the macro-financial backdrop is "highly unsupportive".

The public deficit is expected to be more than 8pc of GDP this year, making the plan to cut it to 3pc by 2015 an ambitious one, it stated.