Ireland had its top credit rating removed by Standard & Poors, which cited the country's deteriorating finances.
The rating was lowered one step to AA+ from AAA with a "negative outlook," S&aP said in a statement today from London. Ireland received the top rating in October 2001.
The deterioration of Ireland's public finances will likely require a number of years of sustained effort to repair, on a scale greater than factored into the government's current plans, Trevor Cullinan and Frank Gill, analysts at S&P in London, wrote in a report today.
Fine Gael's spokesman on finance Richard Bruton said the news was further evidence of the Government's "appalling handling" of the economic crisis.
"This is bad news for Ireland at a very bad time. Standard & Poor's decision to downgrade Ireland's credit rating will make it even harder for the economy to recover. Yet the need for a credible strategy to get the country out of this mess has never been greater," he said.
"Borrowing just became more expensive, and the Government will have to dig even deeper to balance the books next week."
Mr Bruton described it as "startling" that Ireland was one of the first economies to be downgraded by S&P.
"The economy has fallen a very long way from boom to bust under Fianna Fáil's stewardship. But the downgrading is a very clear indication of the lack of international confidence in this Government's ability to get us out of this crisis and restore Ireland to growth,"he said.
Mr Bruton called for th Government to bring "radical reform" to the public sector and impose what he described as a "bold agenda of reform" for the public services.
Euro-region governments are increasing borrowing to bolster ailing economies and bail out banks reeling amid the fallout from the global credit crisis. S&P lowered the ratings of Spain, Portugal and Greece in January.
The European Commission forecast in January that Ireland's budget deficit may widen to 11 per cent of gross domestic product this year, almost four times the European Union's approved limit.
Bloomberg