Standard & Poor's Downgrades Ireland

Announcing the downgrade, they said: "We have lowered the long-term rating on Ireland because we believe that the fiscal costs to the government of supporting the Irish banking system will be significantly higher than what we had expected when we last lowered the rating in March 2009, and, consequently, that the net general government debt burden will also be significantly higher over the medium term."

Fine Gael Deputy Leader and Finance Spokesman Richard Bruton T.D., said that the decision to downgrade Ireland's credit rating together with the government's poor showing in the polls, is "more evidence that Fianna Fáil is unable to save the economy."

"The electorate has given the Government a massive vote of no confidence about the economy. Now Standard & Poor has done the same by downgrading Ireland's credit from AA+ to AA," he said.

"This downgrading confirms Fine Gael's fears that the Government's approach to the revival of the banking sector will place a massive burden on taxpayers, and the long-term health of our public finances. The Government must now reconsider its proposals for a National Asset Management Agency before the taxpayer is irretrievably committed to this position.

"Undoubtedly, S&P's downgrade also reflects growing concern that Fianna Fáil won't meet its own end-of-year tax targets, which were set as recently as April. What's more, it confirms that the Government's Budgetary strategy, with its very heavy emphasis on tax increases rather than restructuring public spending, is undermining the long-term capacity of the economy to recover.

"This downgrade of our public finances, together with the sharp rise in the share price of the banks in recent weeks, suggests a growing market consensus that NAMA involves a massive transfer of wealth and resources from the taxpayer to bank investors, because the State is going to overpay for the banks' toxic loans and related assets," he concluded.