It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Some features of ATS will be disabled while you continue to use an ad-blocker.
BETWEEN COLLAPSING house prices, bankrupt banks and spiralling unemployment, you might be forgiven for thinking that fate has already dealt Ireland every misfortune in its hand. However, there may be one more unpleasant surprise in store for us, the prospect that international investors unexpectedly stop lending to the Government.
Economists call this a “sudden stop”. The original sudden stop occurred in 1998 when a default by Russia panicked lenders away from Latin America and plunged their economies into prolonged crisis.
After a decade of a credit-fuelled property bubble, the economy is not so much crumbling as vaporising: were we the size of Britain, January’s rise in unemployment would have been over half a million.
Ireland is one of six EU states that the commission will today recommend should face an excessive deficit procedure, which is a process that allows the EU executive and other EU partners to recommend policies that would restore an errant state’s finances to order. France, Greece and Spain are also to be named.
“This is not about punishing Ireland. It is about applying peer pressure to help the Government get its house in order on the deficit,” said a commission official, who added that EU finance ministers had to approve the reports before the excessive deficit procedure formally opened.
The reports on Ireland, which are expected to be published today, say the Irish deficit was 6.3 per cent of GDP in 2008 and could rise to 13 per cent of GDP if policies are not changed. This greatly exceeds the 3 per cent limit set under the Stability and Growth Pact underpinning European monetary union.