Irish bailout 'stuns' experts: "
There are fears that the additional money being put into Ireland's banks will not contain contagion in the eurozone
The additional €35bn (£29.8bn) being ploughed into Ireland's banks has shocked experts, who have expressed concern that tonight's bailout would not contain contagion in the eurozone.
Brian Lucey, associate professor of finance at Trinity College Dublin said he was 'stunned', adding: 'We've already put at least €32bn into them, so that's going to be €67bn, which is 50% of GNP, that's a world record'.
He also warned that a new government next year could rip up the deal. 'Sovereign governments have a right to effectively do whatever they want,' he said.
The EU authorities had hoped that the Irish bailout would draw a line in the sand and halt the threat of Spain and Portugal needing international assistance. But tonight, investors and analysts were far from certain that this would be achieved.
Ashok Shah, chief investment officer at investment firm London & Capital, said Ireland might now enjoy some "temporary relief", but that bond investors' concerns could now switch to Portugal and Spain.
'Portugal is already in the borderline, it will have to be rescued soon, maybe within a matter of weeks. The market will also focus on Spain. It will remain very volatile.'
Others agreed. 'There's absolutely no indication that the agreed package for Ireland is going to soothe those concerns stemming from the Iberian peninsula,' said Philip Shaw, chief economist of Investec.
Peter Westaway, chief economist at Nomura concurred. 'I don't think this is going to be a silver bullet. I think there are still going to be some question marks on Portugal and Spain,' he said.
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