DUBLIN (Bloomberg) — Ireland is "increasingly likely" to seek aid from the European Union-backed rescue fund as its borrowing costs continue to rise before the government's 2011 budget, NCB Stockbrokers said.

"When your sales force doesn't believe it can drum up sufficient demand for Irish bonds at feasible rates, it gives an indication of sentiment," NCB chief economist Brian Devine in Dublin wrote in an e-mailed report yesterday, referring to comments by primary dealers in Irish bonds. "It is increasingly looking like the European Financial Stability Fund is the most likely scenario."

Irish bonds fell for a 10th day today, pushing the yield on the country's 10-year debt above eight percent. The government, which said it needs 15 billion euros ($21 billion) in savings over the next four years, is struggling to convince investors it can reduce its budget deficit and cover the cost of bank bailouts without outside help.

Devine said tapping the EFSF may be a "positive for both the Irish economy and the bond market" as long as the government can retain control of its tax policy, especially its 12.5 percent corporate tax rate. European Union Economic and Monetary Affairs Commissioner Olli Rehn said last month that Ireland may have to rethink its "low-tax" strategy as part of measures to reduce its budget shortfall.

Going to the EU for aid would mean plans "would be laid down in black and white and worries about interest costs would subside", Devine said. "Key, of course, in this view is that the 12.5 percent corporation tax rate would not be lost".

The difference in yield, or spread, between Irish 10-year debt and German bunds widened to a record 546 basis points yesterday, according to Bloomberg generic data. The spread has more than doubled in the last three months.