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A year ago Ireland could finance its State borrowing on global capital markets by selling government debt at very close to the German rate for 10-year bonds. A year of great volatility in financial markets has changed all that. And today Ireland must pay investors more than that German benchmark rate. The differential, or yield spread, between Irish and German bonds has widened significantly in the past 12 months – by some one and a half percentage points.

Michael Somers, chief executive of the National Treasury Management Agency, last week warned that difficult trading conditions in global bond markets will be a feature of 2009. And that presents the NTMA with a formidable challenge in financing a high level of government borrowing this year. For Ireland will be in competition with other sovereign borrowers on global financial markets, where US and European governments will also raise huge sums to finance their national debt.