Martin Bamford, co-director of Informed Choice, has told clients to take their money out of Irish banks over concerns the Irish government will not be able to honour its 100% deposit guarantee.

The Guildford-based adviser said there is no reason why UK savers should risk losing deposit protection if they can withdraw savings from Ireland without penalties.

An emergency Irish budget announcing tax hikes and spending cuts plus the creation of a ‘bad bank’ showed the extent of the pressure the Irish economy is under.

‘Any UK resident [with savings in an Irish bank] needs to think carefully after the emergency budget,’ said Bamford (pictured). ‘The strength of the guarantee is only as good as the backer and in the case the Irish government’s finances are looking shaky.’

UK savings flooded to Irish banks after the government promised to protect 100% of deposits last year, topping the UK Financial Services Compensation Scheme (FSCS) which returns the first £50,000 of depositors money should a bank fail.

Consumers who opened savings accounts with the UK Post Office found money was deposited with Bank of Ireland, which is not covered by the FSCS. Allied Irish was the only Irish bank whose deposits are protected by the FSCS.

Liberal Democrat Treasury spokesman Matthew Oakeshott said Moody’s decision to downgrade 12 Irish bank, including the Bank of Ireland, would add further strain to Irish banks’ reputation.

‘The market’s message is that this is a shaky bank backed by a shaky government,’ he said.