Debt ‘high risk’ over medium term warns European Commission

A slowdown in economic growth coupled with a minor rise in interest rates would have a sizeable impact on Ireland’s debt ratio which poses a “high risk” over the medium term, the European Commission has warned.

The commission’s latest fiscal sustainability report acknowledges the country’s falling level of debt and finds little cause for concern in the short term, but warns of a potentially more worrisome scenario over a longer period of time.

Should fiscal policy remain unchanged and “normal” economic conditions persist, Ireland’s public debt would decline to just shy of 83% of GDP in 2023 before rising again to about 85% in 2026 as the costs of an ageing population and predicted interest rate increases have an effect, the report estimates.