Recovery is ‘safe’ from rises in yields

RECENT increases in yields on Irish bonds are unlikely to signify a change to investors’ trust in Ireland’s recovery, says a leading economist.

Bank of Ireland’s chief economist, Dan McLaughlin, said a number of factors — including the budget deficit remaining on target; lower than expected interest on EU borrowings; a lower cost to the state from the last round of bank recapitalisations; the NTMA being funded up to the end of 2013; and the sovereign debt ratio possibly peaking at lower than anticipated levels — have lowered the risk outlook.

“August proved a turbulent month for financial markets across the globe. Investors pared risk in the face of a slowdown in global growth, notably in the major western economies, and further uncertainty regarding sovereign debt in the euro area.” said Dr McLaughlin.