Ireland’s credit downgrading could create caution among the country’s hirers, says Jason Kennedy, group chief executive of Ireland’s Grafton Employment Group.

This week, ratings agency Standard & Poor (S&P) cut Ireland’s credit rating to AA-. S&P rates borrowers on a scale from AAA to D. An AAA rating represents the best quality borrowers, reliable and stable, while a D rating represent those that have defaulted on obligations and those that S&P believes will generally default on most or all obligations. An AA rating represents quality borrowers but a bit higher risk than AAA.

Kennedy told Recruiter: “Standard and Poors downgrading of Ireland’s credit rating will have a negative impact on all businesses if it translates to banks charging higher interest rates to their customers both personal and business. I think it is important to remember that even with this revised rating Ireland is still one of the strongest in the Euro Zone, however it will be the banks that will decide how much this news will impact on Irish businesses.

“Higher interest rates are already crippling many Irish businesses and for those that are coming through the current economic challenges and considering expanding their business, this is another blow. What this downgrading could mean is that employers will again become more hesitant about hiring new staff until they feel that they are on more solid ground.

Kennedy said that his firm has seen “slow but steady improvement” over the first nine months of 2010.

“It would be disappointing to see the recruitment sector in Ireland lose this momentum, however I fear we will see a short-term impact because of this announcement,” he said.