Taxpayer at mercy of ECB interest rate hikes

A SIMPLE compound interest calculator shows that if the Government borrows €54bn over 10 years from the ECB it will cost €62bn.

If interest rates rise as expected then this price shoots up by €7bn per 1% increase. At 4% we will have to pay the ECB €80bn. This means Brian Lenihan’s Dáil statement that if the property market rises by 10% we get our money back is optimistic, to say the least.

Why the minister did not tell us the full cost is a question for him. Perhaps it should be asked. 4.5% is the maximum that the ECB has charged in the past so the table below ends at this figure.