Market tensions ‘pushing up the cost of borrowing’

FINANCIAL market tensions that are pushing up the cost of borrowing for countries including Ireland pose one of the main threats to growth in the EU, according to the European Commission which has just doubled its eurozone growth forecast for the year to 1.7%.

And the Government was warned that it must maintain its efforts to reduce the budget deficit despite having to put massive amounts of money into Anglo Irish Bank.

The EU’s interim forecast looked at the eight largest member states representing 80% of the bloc’s economy and found that growth this year so far has been better than expected, driven by stronger domestic demand.