Moody’s has left Ireland’s A2 rating unchanged and maintained its stable outlook for the sovereign. Ireland’s rating has not changed since September 2017. 

Despite Ireland’s high wealth levels, a return to fiscal surplus and a reduced sectoral risk in the banking sector, the agency has left the outlook and rating unchanged due to ongoing external risks, the high national debt level, and the continued susceptibility of the banking sector to event risk.

Goodbody Stockbrokers say that of note in the agency’s outlook is the ongoing risks facing the economy, of which Moody believe a no-deal trade negotiation at the end of the transition period is the single biggest threat to the Irish economy, although they believe this outcome is not likely. Corporate tax changes (via the OECD BEPS process) also pose a threat to the economy in the mediumterm. 

The Department of Finance estimates corporate tax receipts will be €5bn lower by 2026, while Moody’s view is that any OECD proposals will not result in a material change in the existing stock of FDI in Ireland, although flows could come under threat.

According to Goodbody Stockbrokers, "Looking ahead, there would need to be a further decline in the public debt ratio, clarity on a future UK/EU relationship and a muted corporate tax hit in light of the OECD proposals in order for the ratings agency to change the economy’s outlook and rating. While the ratings agency is less concerned with short-term changes to the economy, we also think the time it takes to form next government and the shape it will take will play an important role in Ireland’s growth for this year."

Source: www.businessworld.ie