It seems Ireland will be squeezed both ways even as the green shoots of recovery are spotted in the US.

It started slowly and then all of a sudden the interest rate that Ireland must pay for its debt reached over 5.6% last week, the highest since the huge 6% rate foreign lenders were demanding during the crisis weeks of early March. Long-term interest rates moved higher, signalling that the debt markets are staring to believe the US recovery story. Unfortunately, good news from the world economy will likely push up the costs of servicing an increasing Irish debt pile which, excluding Nama, will reach at least €150bn in the next four years. It will be a significant interest bill.

The premium Ireland must pay above the equivalent German rate also widened to over two percentage points (200 basis points) as ratings agency Standard & Poor's highlighted for overseas audiences what many have grasped here: the Irish taxpayer will have to pay out big and the state will have to borrow a lot of cash to clean up the banking losses, no matter how Nama does its sums.

Irish sovereign interest rates are now the highest in the eurozone, almost 30 basis points above the 5.35% that Greece must pay. A rise in the absolute levels of sovereign interest rates and the Irish premium spread over Germany will worry government officials.

We must hope there are no other road bumps, such as scares about the capacity of eastern European states to pay back their debts. If there are, raising money on the sovereign debt markets later this year may be troubling.