Moody's strips Ireland of its remaining coveted triple-A rating on grim outlook

City A.M. Reporter
MOODY&rsquo;S yesterday stripped Ireland of its last AAA credit rating and warned Prime Minister Brian Cowen he needed to inflict more fiscal pain on his recession-wracked country or risk a further costly downgrade.<br /><br />Cowen has put Ireland on a five-year austerity diet after a debt-fuelled property binge transformed the former &ldquo;Celtic Tiger&rdquo; economy into one of the industrialised world&rsquo;s worst performers when the housing market crashed.<br /><br />Moody&rsquo;s said the government&rsquo;s corrective actions and low debt levels before its economic meltdown meant that it needed to carry out only a moderate downgrade at this stage. But it cautioned that the downside risks outweighed the upside risks.<br /><br />The agency, which cut Ireland&rsquo;s rating to &ldquo;Aa1&rdquo;, said it would be closely watching Cowen&rsquo;s attempts to squeeze &euro;4bn in savings in the next budget in December. But Moody&rsquo;s signalled it would not follow rival Standard &amp; Poors in a rapid round of downgrades.<br /><br />&ldquo;A meaningful fiscal adjustment will require an additional structural improvement of Ireland&rsquo;s primary budget balance,&rdquo; said Dietmar Hornung, Moody&rsquo;s senior analyst. &ldquo;But at this juncture I don&rsquo;t see imminent issues that would force us to change the rating in the short term.&rdquo;<br /><br />The loss of the AAA altogether was expected after S&amp;P&rsquo;s cut its rating twice this year to AA.