{"id":668583,"date":"2026-10-29T06:18:09","date_gmt":"2026-10-29T06:18:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/668583\/"},"modified":"2026-10-29T06:18:09","modified_gmt":"2026-10-29T06:18:09","slug":"ireland-avoids-snowball-effect-of-weak-growth-and-higher-debt-payments-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/668583\/","title":{"rendered":"Ireland avoids \u2018snowball effect\u2019 of weak growth and higher debt payments \u2013 The Irish Times"},"content":{"rendered":"

Ireland and Japan<\/a> were the only two OECD<\/a> countries to avoid \u201cthe snowball effect\u201d last year, AIB<\/a> has noted in its latest report on the economy.<\/p>\n

The two were unique in registering economic growth strong enough to negate or offset the impact of higher interest rate payments, leading to an improvement in their respective debt-to-GDP ratios.<\/p>\n

The rest of the world\u2019s most developed economies, to varying degrees, watched their debt metrics deteriorate. Higher debt repayments and limited fiscal headroom are the financial zeitgeist.<\/p>\n

AIB\u2019s report contained a mini-analysis of the current turmoil in bond markets. <\/p>\n

\u201cOverall, the OECD estimates that the G7<\/a> countries spent around 2.1 per cent of GDP on interest payments in 2025,\u201d it said. <\/p>\n

\u201cThis was forecast to rise to 2.3 per cent on average this year, but it will now be higher following the surge in government bond yields,\u201d it said.<\/p>\n

\u201cThis will have real economic consequences, particularly as populations continue to age at a time when many countries are spending more on defence, energy and other areas,\u201d the report said.<\/p>\n

[\u00a0International investors give Ireland the thumbs up, ignoring corporate tax warningsOpens in new window<\/a>\u00a0]<\/p>\n

After playing a stellar, if unwanted, role in the 2008 financial crisis, Ireland now finds itself at one remove from the financial challenge of the day courtesy of record corporate tax<\/a> receipts.<\/p>\n

AIB noted that Government is set to run a large budget surplus once again in 2026. <\/p>\n

As a result of this, the spread between Irish and German 10-year yields has actually narrowed slightly to just 13 basis points \u2013 or 0.13 of a percentage point.<\/p>\n

\u201cThis implies Ireland is very firmly within the \u201dcore” group of European countries alongside Germany, Netherlands and Luxembourg,\u201d AIB said.<\/p>\n

Without Ireland\u2019s corporate tax bonanza, the economic atmosphere in the State would be entirely different.<\/p>\n

The Department of Finance<\/a> forecasts that the State\u2019s surplus this year would turn to a deficit of \u20ac12.1 billion (3.4 per cent of national income) if windfall corporation tax receipts were excluded, rising to a deficit of \u20ac20.3 billion (4.6 per cent of national income) by 2030.<\/p>\n

[\u00a0There\u2019s a good chance Ireland will come to regret this boomtime period as a missed opportunityOpens in new window<\/a>\u00a0]<\/p>\n

\u201cThe lesson is [that] Ireland cannot take its success for granted, and the recent memory of bond markets souring on our debt highlights how quickly sovereigns can lose credibility,\u201d AIB said.<\/p>\n","protected":false},"excerpt":{"rendered":"Ireland and Japan were the only two OECD countries to avoid \u201cthe snowball effect\u201d last year, AIB has…\n","protected":false},"author":2,"featured_media":668584,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[7715,128,6572,24463,52935,61,60,582,43,15016],"class_list":["post-668583","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ireland","tag-aib","tag-bonds","tag-cantillon","tag-corporation-tax","tag-g7","tag-ie","tag-ireland","tag-japan","tag-news","tag-organisation-for-economic-co-operation-and-development-oecd"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/668583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=668583"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/668583\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/668584"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=668583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=668583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=668583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}