Call for tougher fiscal policies

IRELAND may have to tighten fiscal policy further to put its economy back on an even keel, a senior Fitch Ratings official has said.

Fitch’s head of EMEA Sovereign and Global Economics Brian Coulton, said in an interview with Reuters yesterday that the outlook for Ireland remained negative, meaning there “is a greater than even chance that the rating will come down”.

“They have to take further tightening measures to prevent the deficit from blowing out even more,” Mr Coulton said.

He said the Irish economy was flexible and would gain from a recovery in global trade next year.

“Ireland stands well-placed to benefit from an international recovery … but that’s going to be offset by the domestic problems by another decline in GDP next year,” he said.

Fitch downgraded Ireland by one notch to AA+ in April and kept the outlook on negative.

Moody’s Investor Services is the only ratings agency that still ranks the economy as AAA.

It warned on Monday that the country’s top credit rating was on the “borderline” of a downgrade.

Earlier this month, Standard & Poor’s cut its rating for the second time in three months to AA from AA+ and kept the outlook on ‘negative’.