IRELAND GOING DOWN THE DRAIN
Irish economy contracts by 1.2%. The economy was hit by a fall in consumer spending
The Irish Republic’s economy shrank in the second quarter from the previous three months, surprising analysts who had been expecting growth.
Gross domestic product (GDP) fell 1.2%, the Central Statistics Office said. It also revised down its measure of growth in the first quarter to 2.2% from 2.7%. Gross national product (GNP), seen by some as a more accurate barometer of the economy, fell by 0.3%.
The government has been seeking to reassure investors about the economy.
There have been concerns in the markets about the health of the Irish economy and government finances because of continued problems in the banking sector.
MARKET FRIGHT
Meanwhile the difference between yields on 10-year Irish government bonds and German bonds – considered the safest – rose to its highest level in more than 10 years.
Irish debt is trading 4.25 percentage points above equivalent German bonds. This spread reflects how much riskier markets perceive the Irish economy to be compared to Germany’s.
Before the disappointing growth data was released, markets were already taking fright at a eurozone industrial survey that pointed to a sharp European slowdown in September.
There was also concern at comments on Wednesday from Irish debt management head Oliver Whelan that the government would not back subordinated debts of the nationalised lender Anglo Irish Bank.
