Ireland’s debt junked as euro crisis spreads
By Michael Day
Europe’s debt woes escalated yesterday as Ireland’s credit rating was cut to junk status, and the crisis threatened to engulf its biggest victim yet in Italy. Moody’s Investors Service cut Ireland’s ratings by one notch to Ba1 from Baa3 and kept a negative outlook.
It added that there was a danger that the country will need more bailout aid in late 2013 when the current European Union-International Monetary Fund support program ends.
Italy and Spain both insisted last night that their economies, and with them the future of the euro, were secure from the debt crisis that has already floored Greece.
Speculators have stepped up attacks on the two southern European economies – the third and fourth largest in the eurozone. In both countries borrowing costs soared, while stock markets and the euro fell back – despite pledges from finance ministers that Italy and Spain were committed to slashing their debt levels.
The developments came as Greece, which for more than a year has been swamped by a growing sovereign debt crisis, rejected a rescue deal proposed at an emergency EU finance ministers’ meeting in Brussels that involved a partial default on repayments. The plan had won support among several countries, as well as from Christine Lagarde, the new IMF chief.