Expect to hear a lot more about sudden downgrades to Greek sovereign debt after it shocked debt markets, the ratings agencies and the EC with news that its budget deficit, instead of falling this year, was actually soaring. Finance minister Brian Lenihan will likely use the Greek experience to warn of the consequences here if public service unions block proposed €4bn cuts in his budget in December.

Fitch not only downgraded Greece's local currency ratings to A-, four levels above junk, but went onto to question the country's "credibility" after the new Greek finance minister announced that the 2009 budget shortfall would amount to 12.5% of GDP. The reason for the fury was that Fitch had forecast a deficit of only 6%, while the previous government, before the elections earlier this month, had told Brussels it had targeted a 3.7% deficit.

EU monetary affairs commissioner Joaquín Almunia voiced "serious" concern over the Greek budget deficit.

The debt markets did not punish Greece too much: the yield on its 10-year benchmark bond rose only three basis points to 4.67% last week, while the rates of other eurozone countries fell slightly.

However, the Greek experience is bad news for Ireland. Its new deficit almost exactly matches Ireland's target deficit, but our ten-year benchmark interest rate, at 4.79%, remains the highest in the eurozone.

Irish 10-year bonds were unchanged last week, as debt markets showed scepticism that the €4bn of cuts will reduce the budget deficit. Like his Athens counterpart, Lenihan cannot afford unpleasant surprises.