THE Greek debt crisis and the resultant bail-out from the International Monetary Fund and the eurozone countries has prompted Irish consumers to worry about the implications for our economy. Here are some of the ways the unfolding eurozone debt debacle may impact on us.

More cuts/tax rises to be needed
Ireland’s debt is still AA rated by rating agencies such as Fitch, Standard & Poor’s and Moody’s. But in the past fortnight Spain and Portugal have been downgraded. The Irish Government is already committed to another €3bn or cuts in expenditure and tax rises in the next Budget. These austerity measures may need to be brought forward to convince markets our debt is not out of control. Plus, we have to contribute €1.3bn to the Greek bail-out.

Borrowing costs to remain high
Many bond traders believe that borrowing costs for the country are set to remain high. Already the National Treasury Management Agency, which manages the State’s debt, has postponed a bond issue due this month, because of the high cost of raising funds in international markets. Irish banks are set to find it more expensive to raise funds – Bank of Ireland is currently raising €3.6bn and AIB needs to raise funds soon. If banks find it more expensive to raise funds these costs will be passed on to consumers and businesses.

Pay down debt
Consumers and businesses would be wise to pay down debt, if they are vulnerable to rate rises. Already a number of banks have increased standard variable rate mortgages and have been upfront about more rises to come.

Deposits are guaranteed
The blanket guarantee for banks ends in September but all accounts in Irish regulated banks and building societies are guaranteed up to €100,000. This includes credit union accounts.

If you are worried about the safety of Irish banks put some of your money in a bank with a guaranteed from another state.


·         British banks operating in this market that are covered by the British deposit guarantee (£50,000) include Nationwide (UK), Leeds Building Society, Investec and Northern Rock.

·         Danish-owned National Irish Bank has its deposits fully guaranteed by the Danish State until September with this set to be replaced by a €100,000 guaranteed. Denmark is not part of the euro.

·         Dutch triple A rated RaboDirect offers decent rates – 2% on its demand deposit account (Holland is part of the eurozone).

Open a foreign currency account
In theory you can open a sterling bank account as a British non-resident with the likes of Anglo Irish Bank, Ulster Bank and Investec. Alternatively, you can open a sterling account with a bank in the North. You will have to pay tax on the interest and any rise in the value of the sterling currency.

Consider gold
Gold is seen as a “hedge” against inflation and declines in the value of currencies. This is partly why the price of gold has been surging in the past two years. But you should not have more than 5pc of any money you have to invest in gold. This means if you have €10,000 to invest you should only buy €500 of gold. Gold does not pay a dividend or an interest rate.