Independent.ie, 15.02.2010
IRELAND has been identified as one of a small number of countries that poses "a real risk" to the future of the euro, according to reports in a Sunday newspaper.
The report cites research from influential German think-tank CESifo, which warned of "very serious" slowdown in the Irish economy three years ago.
The new research reportedly lists Ireland and Greece as two countries where inter-national money markets see a significant risk of a sovereign default or an exit from the single currency. This perceived risk is reflecting in the markets for Irish and Greek debt, CESifo says, even though leaving the eurozone is not on the political agenda.
Ireland, along with Finland, also comes in for a mention in CESifo's list of countries for which eurozone membership is "not optimal", due to our heavy reliance on trading with non-eurozone countries.
Against the backdrop of last week's Greek manoeuvres, the latest CSEifo research also warns that a "wave of bailouts" of weaker member states must be avoided to keep the euro currency stable.
Munich-based CESifo has a long history of reporting on Ireland, most notably in 2007 when it warned that our economy faced an imminent and "very serious" slowdown at the hands of a "significant reversal" in construction activity.
Last November CESifo research co-ordinator Paul de Grauwe described the way the international community had been "misled" by Ireland.
"Somehow so many people failed to see the foundation of that growth was based on bubbles and excesses financed by credit," he said.
"It was quite a shock for many and for me."
Laura Noonan
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