Ireland Loses Highest Credit Score

As next week's 'emergency' Budget looms, the Irish Republic's top 'sovereign' credit rating has been cut.

The agency, Standard & Poor's (S&P) downgraded the rating on Government debt by one notch from a AAA rating - which is the highest - to AA+.

Standard & Poor's - a division of McGraw-Hill that publishes financial research and analysis on stocks and bonds - also put the Irish Republic on a "negative" outlook, meaning that further downgrades are likely.

The move means the ratings agency is less convinced that the Irish Republic can pay back its debt than previously.

The move is largely symbolic, though, as S&P still considers its borrowings to be relatively safe for now.

The Irish Republic has experienced a sharp downturn, becoming the first eurozone country to fall into recession in 2008. It shrank by 2.3%, the first decline since 1983.

Its budget deficit is expected to reach 9.5% of GDP in 2009, the highest in the EU and far above the EU rules of 3%.

The economy shrank by an annual rate of 7.5% in the last three months of 2008, the Irish statistics office said earlier this month, led by the biggest fall in construction on record.

Also, thge unemployment has nearly doubled, from 5% at the start of 2008.

See: Tough Budget Looms As Irish Economy Nosedives

(BMcC/JM)