Irish Economy and Budget Watch / / /Emergency Budget Announced for April 7th

EvotingMachine0197 wrote:

So if I'm left handed, do I just reverse everything ?

Wouldn't want you getting the wrong message.

BTW, which direction do I face to talk to Audi ?

If you do, I think the other person would need to use a mirror to look at you.

Brian Lenihan gave a long interview on RTE Radio this morning at 8.20 a.m. - it would be well worth listening to if anyone has time to link it later.

cactus flower wrote:

Brian Lenihan gave a long interview on RTE Radio this morning at 8.20 a.m. - it would be well worth listening to if anyone has time to link it later.

Sounds like he's listening to Bruton about getting the country more competitive. He didn't foresee another quick budget soon - George Lee is on right now talking about a stimulus which Lenihan said was effectively the spending done in the budget and the 6.5% being borrowed next year. The NDP spending is a boost he's saying.

Auditor #9 wrote:

cactus flower wrote:

Brian Lenihan gave a long interview on RTE Radio this morning at 8.20 a.m. - it would be well worth listening to if anyone has time to link it later.

Sounds like he's listening to Bruton about getting the country more competitive. He didn't foresee another quick budget soon - George Lee is on right now talking about a stimulus which Lenihan said was effectively the spending done in the budget and the 6.5% being borrowed next year. The NDP spending is a boost he's saying.

He must have been reading MN - I was posting that last week. It dawned on me that we are pumping money into the economy through the NDP and public spending, and that because this is based on long term strategic plans it is much better targetted than say the British VAT cuts. I think the NDP should be tweaked to get better value for money and more energy sustainability, but otherwise we could do a lot worse.

Yes cactus - the SBP had an article on it in May last. They quoted recommendations which said not to cut the NDP. Makes sense. If you build stuff you'll have that in any event (unless you sell it to Michael O'Leary ) Why are we not even doing this with forestry and providing ourselves with fuel too. Tree farming. But the roads make sense to me mostly - there are a plethora of them issuing out of Dublin mind and one from Ennis to Gort to Galway is only going to be done from Ennis to Gort among other held up projects but isn't a public transport system going into Galway - the GLUAS ? This will be there long after the fan is all murky. More stimulus into alternative sources of energy would be wise. We should be trying to head for 2GW installed wind - it's just over 1 GW now.

The Irish Times this morning:

State of public finances: "calamitous" "catastrophic" "ruinous" - Opposition

Government management of the economy "clueless" - Sinn Fein

http://www.irishtimes.com/newspaper/frontpage/2008/1203/1228234992898.html

Quote :

The figures reveal a massive shortfall of close to €7.5 billion in the amount of tax revenue collected by the Government during the first 11 months of the year. This is far worse than was predicted as recently as the Budget in October and analysts now expect that the shortfall for the year could exceed €8 billion.

Why doesn't the irish times ask Kerrynorth ? Wasn't the exchequer statement published yesterday - 7.8 billion ?

Quote :

Mr Bruton said the budget had targeted the wrong people and poured dwindling taxpayers' resources in to unreformed public administration. He added that the predicted tax take of €43 billion for next year was no longer feasible and was likely to be of the order of €38 billion.

Bruton offers the usual criticisms and suggestions in the link above.

Quote :

Tax revenue is 16 per cent behind projections made at the start of the year. VAT has plummeted €2.1 billion below expectations, capital gains tax is down €1.7 billion and stamp duty is €1 billion short of its target.

Lenihan urged us to think of the taxpayer when we were shopping this year. Normally there is no link between economics and culture, society, community - unless people are able to instantly assess the figures and influence them in a feedback loop. The general public are not all kerrynorths.

Quote :

Ulster Bank economist Pat McArdle said the 2009 deficit could be as high as €16.5 billion, resulting in a General Government Deficit of 8 per cent of GDP, compared with the 6.5 per cent provided for in the Budget. "We can see now why the Government rules out participation in the EU fiscal boost scheme last week - we have already had our fiscal expansion and must contemplate cuts instead of boosts," said Mr McArdle.

Quote :

The monthly unemployment figures out today are expected to show a further significant increase on last month's total of 251,951.

Element 6 in Shannon loses 150 jobs - this is in my backyard, any good news in yeers ?

300 new jobs adding colouring to Coke in Wexford?

Element 6 sounded like an interesting operation.

I don't agree that the NDP should be pushed on with lock stock and barrel - back in May I was saying to review it thoroughly and pull nonsense like Metro North out of it - put the money into renewables and electric buses.
The NDP is full of vanity projects and waste - it needs tweaking big time.
But I do agree with going on with infrastructural spending - particularly renewables.

The "soft" government spending is just as important - the OECD showed we don't have too many public servants, just poor value for money due to bad management: sacking them is not going to help - a wage freeze or even cut would make much more sense. It will end up costing us to sack them as they will be on the dole and get redundancy. Then in three years time we will have to recruit them back and retrain them, and we wont get the redundancy money back. Better even to put people on a 3 day week.

Education is the big weakness: with more unemployment people will lose skills. Now is the time for a big push across all age groups on literacy, IT skills, languages, science and the lot.

kerrynorth wrote:

My guess is about a 14000 increase in the seasonally adjusted unemployment figure.

The one to wait for though is the January figure which I reckon is going to bust through the 300k with avengence - possibly increasing as much 25-30k in that month alone.

kerrynorth, on the Pin

16,600 people more on live register in Nov. Total unemployment up to 277k.

Auditor #9 wrote:

16,600 people more on live register in Nov. Total unemployment up to 277k.

any bets on January; how much??

expat girl wrote:

Auditor #9 wrote:

16,600 people more on live register in Nov. Total unemployment up to 277k.

any bets on January; how much??

I'll take the bait here and say 298k

Seriously, 277K unemployed in Ireland right now?

floatingingalway wrote:

expat girl wrote:

Auditor #9 wrote:

16,600 people more on live register in Nov. Total unemployment up to 277k.

any bets on January; how much??

I'll take the bait here and say 298k

I'll go for 311K. The personal income tax returns were done at the end of Oct and many companies are coming to year end. Lots of people will be put on short time or told to go away for a few months in January.

Joan Burton just on Morning Ireland with the news that the economy here could contract next year by up to 4%. Lenihan's budget is based on a 1% contraction though .. There's no question that the Social Partners will need to be reconvened and a pay cut negotiated, especially if there's general deflation next year which there should be if oil and interest rates stay down.

Quote :

Today's figures show average mortgage repayments fell by 8.4% in November, as banks began to pass on to borrowers the first of three interest rate reductions. Rents also fell by 6.1% during the month.

There was also a sharp reduction in the cost of home heating oil, which was down by more than 10% in November.

In addition, petrol prices were down 7.3% and diesel by almost 10%, as international oil price speculation rapidly unwound.

With further interest rate and oil price cuts still to be passed on to consumers, all the signs suggest that inflation will ease further in the months ahead.

There is also likely to be significant downward pressure on inflation coming from the strength of the Euro, which hit another record high of 88.8 pence against Sterling today.

This would be the equivalent of the old Irish punt being worth almost £1.13 against Sterling - its highest value ever.

Inflation down to 2.5% -- RTE

Superpiper on the Pin

Some number-crunching on today's figures in the Quarterly Accounts:

Construction is down from 9.6% of GDP in 2007 to 8.1%.

Net exports are €2,091 million higher than before which is quite encouraging.

Capital investment is down 14.7% which is not.

Exports were 79.4% of GDP last year and are 79.3% this year.

GDP actually rose this quarter which is nice, but it is likely to contract in future reports.

GNP seems likely to contract by about 2.5% this year, but GDP could surprise by contracting by only 1%, but that is optimistic and could indeed contract by much more.

Morning Ireland this morning on the ESRI report on the economy
http://www.rte.ie/news/2008/1219/morningireland_av.html?2465629,null,209

The economy will contract more than it did in the 80s apparently - 4% as opposed to 3%. Back in the 80s people weren't able to chat about this online though

Auditor #9 wrote:

Morning Ireland this morning on the ESRI report on the economy
http://www.rte.ie/news/2008/1219/morningireland_av.html?2465629,null,209

The economy will contract more than it did in the 80s apparently - 4% as opposed to 3%. Back in the 80s people weren't able to chat about this online though

Yes. This will be our worst recession ever when expressed in terms of the loss of economic output. However, when it is set against the truly exceptional gains we have made in the last 15 years, it is still comparatively mild and consistent with the recessions experienced by our European counterparts in Scandinavia. They emerged relatively well and as long as we can follow their example, the contractionary short-term will promptly give way to a brightening medium-term. We need to hold our nerve, be responsible, take costs out of our economy, attract investment, keep the most effective capital projects going and continue to reward and encourage effort, enterprise and improvement.

This is all nonsense. 13 billion would not be hard to find in that budget....surely?

Quote :

The Government has recorded its largest ever annual budget deficit for 2008, it was confirmed this afternoon.

The latest Exchequer returns show public finances are now €12.7bn in the red.

Overall, tax revenue was €8.1bn behind target last year.

VAT receipts were down by €2.1bn, with capital gains tax down €1.7bn, corporation tax down €1.6bn and stamp duty down €1.2bn.

€41.6bn euro was taken in 2008, compared to €47.8bn in 2007.

The Department of Finance projects that the economy will shrink by 4% over the next 12 months.

They need to cut a few things... early childcare supplement, maybe mortgage interest relief if the ECB rates go down any further (and make the banks pass on the cuts), they should put a floor under petrol (price cannot go below, say, 95 cents, if it does, exchequer pockets the difference), gas guzzlers should be taxed out of existence. There should be a 45 or 50% income tax band at 100,000 euros and they should remove the PRSI ceiling. Any efforts by Barack Obama and the Germans to rustle through the tax evaders with Jersey/Swiss/Isle of Man/Austrian/Luxembourger dodgy bank accounts should be assisted at full speed. There should be a temporary cut in Stamp Duty to 5% which should automatically expire the minute the economy emerges from recession (prevent another property bubble). All taxes on savings with banks covered by the guarantee scheme should be waived. Projects not already started on the NDP should be paused until tax take = expenditure.

I do realise that the Gospel according to Keynes does not suggest raising taxes during a recession, but I actually don't think that handing money to the EMPLOYED will work at the moment. Everyone is panicked. They'll just pay down debt. Furthermore, if there is a big oil crisis in a few years time, they'll need a few spare pennies in the piggy bank

Pay freeze, not cut. Riots cost money and the vast majority of the public service is on less than 50 grand. Tax rises would be tolerated better, I think.

Finally, I suspect that those who are over their heads in debt AND trying to finance stimulus packages will find themselves drowning. I would exempt the US from that rule; because of the trading currency status of the dollar, they'll get away with it. But we wouldn't.

expat girl wrote:

Pay freeze, not cut. Riots cost money and the vast majority of the public service is on less than 50 grand. Tax rises would be tolerated better, I think.

We are already going there. This is the place where the State must find the balance.
1% income Levy.
Zero increase in tax credits for 2009.
0.5% increase in VAT.

These are being balanced with a cuts and freezing at 2008 levels of public spending.

Will this be enough?
Probably not but according to Cowan it'll take 4-5 years to balance the books. Using these methods he might.

That suggests to me that they are taking the long option rather than the short, sharp shock.
I would say government thinking is that once the nation is primed then the larger cuts ans taxes can be made.
2010 might see larger cuts and taxes but they wont "feel" worse. They only "feel" bad now because we had it so good over the last 5 years.

Psychology is a huge thing in all of this.
Cowan better get himself a decent proppaganda minister.

Johnny Keogh wrote:

Psychology is a huge thing in all of this.
Cowan better get himself a decent propaganda minister.

think you're right....the major problem Cowen appears to have is in getting the message across. Still, being bad at spin is not the worst fault. if I were a betting woman, I'd hope New Labour would come out of this worse than our Government....the cr@p they feed the UK public is something else. Waiting lists of less than 6 months for the NHS?? Oh yeah baby, they just make up a new waiting list every 5 1/2 months. And this in the height of the boom. Lord knows what it is like now. And I experienced that one first hand...took me over a year and a half to get seen, and then only because I volunteered for experimental stuff.

Spin should be banned. Fume!

There seems to be a shock in store for the posters on this site and the country in general.

Forget about foolishness like extra vat and petrol taxes.

What Ireland faces is an emergency and what they have are chickens in government and Enda the Eejit as the alternative.

Enda is as dim as dim could be so grin and bear it.

Everyone wants globalism so suck it up ye suckers and work for global wages.

What needs to be done will not be done so expect trouble

cactus flower wrote:

This is all nonsense. 13 billion would not be hard to find in that budget....surely?

Quote :

The Government has recorded its largest ever annual budget deficit for 2008, it was confirmed this afternoon.

The latest Exchequer returns show public finances are now €12.7bn in the red.

Overall, tax revenue was €8.1bn behind target last year.

VAT receipts were down by €2.1bn, with capital gains tax down €1.7bn, corporation tax down €1.6bn and stamp duty down €1.2bn.

€41.6bn euro was taken in 2008, compared to €47.8bn in 2007.

The Department of Finance projects that the economy will shrink by 4% over the next 12 months.

It costs 20 Billion just to pay the wages of public servants. 64
Billion in public services altogether. My plan would be to cost cut
about 3 Billion out of the 64, or 5% say, mostly from backline services
and sundries, raise about 3 Billion on tax increases (but not VAT) and
deal with the rest next year. A deficit will have to be carried anyway.
Trying to kill the deficit too quickly will only do more damage. It is
a tricky number I must admit.

EVM. You are talking horrific rubbish here. There is no 64 billion. That is just a figure in some fool's head, it does not exist.

Revenues next year will be about 30 billion if they are lucky. It could be as little as 20 billion.

The failure to accept reality by the likes of Tony and others is amazing

youngdan wrote:

EVM. You are talking horrific rubbish here. There is no 64 billion. That is just a figure in some fool's head, it does not exist.

Revenues next year will be about 30 billion if they are lucky. It could be as little as 20 billion.

The failure to accept reality by the likes of Tony and others is amazing

Well done Dan, even when I’m minding my own business, you can’t mind yours.

Question, where do you get 64 billion?

As far as I can see total receipts are projected at about 42 billion, 39 billion tax + 1 billion levies + 2 billion misc. Given last years outrun of 44 billion, a projection of 42 for this year seems reasonable to me at this stage.

Assuming the 42 billion to be correct, that would leave us about 5.5 billion short on current exp. To take care of this deficit I would go along with EVM on a cut in costs, but at about 3%, this would save about 1.5 billion along with an increase in income tax, at 5%, to 21 & 43 and corporation tax by 10% to 14%, this would bring in 1.5 billion extra, we’re not spending it anyway, so no great harm done to other revenues. The balance of 2.5 billion, I would draw in over 5 years by not replacing say 5 out of 8 public servants as they retire, this would save about .5 billion per year, cumulative.
There is probably room to repeat most of that dose if necessary.

I do accept reality, but not your projections, because they’re, well projections and not reality.

I do not get 62 billion anyplace. It is EVM who is talking about 62 billion and I tell him it is just in some fool's head.

I consider my projection to be very much closer to the eventual numbers than some lug in the department of finance.

I expect tax revenues 2009 will be about 30 billion and would not be surprised if it were worse. The idea that it will equal 2008 at 42 billion is pie in the sky and is the game of catch up that they have been playing. They are 3 months behind a falling revinue curve and Brutan is correctly saying that the recent budget is out of date and should be tossed.

The idea that extra money can be brought in by raising taxes is insane. Everybody is broke and corporations are already folding up. The blood has already been drained from these two turnips.

Drastic action could have been taken to save waterford glass and if Dell goes it is curtains.

I do not expect any new thinking.


I see where this week the government are to borrow 3 billion. I am assuming it is not by public auction but correct me if I am wrong.

Quote :

Drastic action could have been taken to save waterford glass and if Dell goes it is curtains.

The fact that there seem to be a number of competing buyers, and that the same management has been in place over nearly 20 years of poor performance would suggest youre right about Waterford Glass.

As for Dell, there was a press report that Government had not attempted to have any discussions with Dell about jobs.