Dr. Peter Bacon made an interesting quote stating that he thought that
“The first is I think households are going to be more cautious about spending than is assumed in some forecasts. The second is I think the interest rate consequence of international certainty is going to be a deterrent to investment taking place.”
Earlier, Dr Bacon told the audience that Irish firms borrowing money would ultimately end up paying interest rates that were linked to the cost of Irish government borrowings.
“You can call it yourself as to where the risk premium on government bonds is going to go — where it goes there goes general interest rates for companies in Ireland. In the long term, the cost of finance will be 200 or 300 basis points above the cost of government borrowings.”
The difference between government borrowing and bank borrowing is that people don’t lodge money with the state at zero interest. We do pay taxes, and buy low interest state products via the post office, but on the whole, there …