Credit rating agency Standard & Poor's has cut its outlook on Ireland's debt to negative from stable because of growing financial pressures and the deterioration of key economic sectors.
This means the agency is likely to downgrade the debt, which could make it more expensive for the Government to borrow money on the international markets.
S&P said the revision reflects the growing challenges facing the Government, including the contraction of the housing, construction and financial sectors.
It says that according to the European Commission, property-related tax accounted for 15% of total tax revenues in 2006 before falling to 8% in the first eight months of 2008.
The agency says that general Government debt levels also increased substantially between 2007 and 2008, by more than 16% of GDP, as a result of a widening deficit.
'The negative outlook reflects our view of the likelihood of a downgrade if ongoing fiscal measures to recapitalise the banks and boost the economy fail to improve competitiveness, diversity and growth prospects, thereby leaving a more difficult-to-manage debt burden,' S&P said.
The Exchequer deficit ballooned to €12.7 billion last year from €1.62 billion in 2007 as a collapsing property market led to a sharp drop in property-related taxes, forcing up debt levels.
