Moody’s: Irish political risk for eurozone to stay low

An election in Ireland this year would unlikely roil sovereign debt markets and the political risks with the exception of Italy have mostly abated in the rest of the eurozone, says a Moody’s Investors Service report.

Moody’s: Irish political risk for eurozone to stay low

By Eamon Quinn

An election in Ireland this year would unlikely roil sovereign debt markets and the political risks with the exception of Italy have mostly abated in the rest of the eurozone, says a Moody’s Investors Service report.

In a generally upbeat assessment of the costs of borrowing for eurozone governments this year, the credit rating firm said the “anti-consensus movements” and political risks that upturned markets in the last two years such as the UK’s Brexit vote and the election of Donald Trump have abated, “but only the elections in Italy have the potential to have wider-ranging political consequences for the monetary union”.

Nonetheless, Moody’s assesses that Italy’s euro-sceptic Five Star Movement will fare well at upcoming elections but that it will fall short of securing a majority, while the political clash between Madrid and Catalonia and the outcome of the elections last year in Germany “underscores the impact that anti-consensus political movements can have on political processes”.

The eurozone economy will expand 2% in 2018, slow to 1.7% in 2019, it predicts, as the ECB’s low-interest rate regime “flatters” in the short term, though high government debt will again weigh “as the economic cycle turns and growth decelerates”.

“The underlying causes of the rise in anti-consensus movements have not been addressed — namely, economic insecurity and insufficiently inclusive growth. Real disposable incomes in Italy, Greece and Portugal have still not recovered to 2010 levels —they have only just reached that level in Spain”, saying that national data mask regional “economic hardship” blackspots.

In Ireland, Moody’s said the banks have stronger capital buffers but banking risks have not gone away totally across the 19-states of the eurozone, and the costs of healthcare and public pensions are relatively high in Ireland, as a share of GDP.

The outlook offers no hints about future upgrades by Moody’s of Ireland’s credit rating.

Currently at A2 with a stable outlook, Moody’s to the annoyance of the NTMA, has lagged the pace of other rating firms in upgrading Ireland.

At the depth crisis of the crisis, it rated Irish government debt as junk.

more courts articles

Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited