Market says 25% chance of debt default

INSURANCE against Ireland defaulting on its €85.32 billion national debt has soared on fears the cost of rescuing Anglo Irish Bank will rise, indicating the market believes there is a one-in-four chance of a default.

The rising cost of Ireland’s pledge to support its biggest banks has made the nation’s debt riskier than that of Iceland, whose financial system collapsed in 2008.

However, yesterday the European Union commissioner for economic and monetary affairs, Olli Rehn, said: “We don’t imagine the default of any eurozone country.”