September Exchequer Returns

These are now out.  The general government balance for 2009 is now projected at minus 12 percent of GDP.

63 replies on “September Exchequer Returns”

the slowdown is slowing slightly.

Jan Sept 08 total receipts 29,080,765 total expenditure 33,522,047
Jan Sept 09 Total receipts 24,365,058 total expenditure 30,352,444
Change Reciepts down 17%, expenditure down 10%.

The RTE news has just reported that the deficit is projected to be minus 12%. If only..

Although the headline figures are pretty bad once you start to dig into the numbers it is really frightening.

The headline figure is that tax revenue is 3.9% behind profile but this includes almost 4 months that were know with almost 100% certainty when the profile was released on 28th of April.

When you strip out the first 4 months of a know tax total, revenue is 6.8% below profile.

The Figures are
Income Tax -10.5%
VAT -12.1%
Corporation +11.5%(Primarily due to moving some payment dates)
Excise +00.9%
Stamps +05.1%
CGT -62.6%
CAT -16.4%
Customs -19.4%

If you extrapolate these figures out the total tax revenue for the year is likely to be just below €32.6bn. I think this is what the government is doing when it assumes revenue will be €2bn below profile.

If you assume that Corporation will fall inline with the rest of the main tax lines (i.e down about 10%) revenue is likely to be less than €32bn.
Possibly even as low as €31.5bn if the trend continues which I believe it will.

What will happen Income Tax from the self employed?

Anybody know what the preliminary payments were from last October?

I calculate 12 per cent of GDP to be almost exactly 20 billion euros. Well, well, well! So, Garret Fitzgerald was right after all, and the ‘gang of 46’ were wrong. Not bad for a man of 83. Will the ‘gang of 46’ now have the courage to admit their error and perhaps apologise to Garret. And, while the ‘gang of 46’ themselves were a model of politeness (fair play), some of the posters who came out in support of them, both on this site and in other less reputable sites, were extremely offensive about Garret’s mental prowess at age 83. Shame on them now!

To refresh memories, here is a link to the thrilling debate which had the nation riveted back at the beginning of September.

To recap:

The ‘gang of 46’ predicted a deficit of 30 billion euros this year. Garret took umbrage at this and said that it would be 20 billion euros. He said that, because of this, he could have no confidence in them. Matters came to a head when Garret and Karl Whelan, the leader of the ‘gang of 46’ clashed on RTE, in a debate that will be remembered by generations to come as the ‘Clash of the Titans’. To get things absolutely precise, the disagreement was about the definition of the deficit as well as the size of it. Garret made it clear that his 20 billion figure was referring to the ‘general government balance’, which EXcludes the 4 billion one-off payment to Anglo-Irish Bank. Karl made it clear that his 30 billion figure was referring to the ‘exchequer balance’, which INcludes the 4 billion one-off payment to Anglo-Irish Bank.

Now that we are closer to the end of the year, and can be more certain about the outcome, its clearly game, set and match to Garret Fitzgerald.

His prediction for the ‘general government balance’ deficit is likely to be spot-on. In contrast, even if we add on the 4 billion one-off payment to Anglo-Irish Bank, the ‘exchequer balance’ deficit will come nowhere near the 30 billion euros that the ‘gang of 46’ predicted.

Regarding the figures themselves, tax receipts are 965 million lower than target, but this is partly balanced out by expenditure being 514 million lower than target. So, it looks like the deficit will be around 0.3% to 0.5% greater than Brian Lenihan predicted in the April budget. I attribute both to the much-lower-than-predicted inflation rate. As is well known, we actually have negative inflation. The effect of this is both to reduce taxes and to reduce costs incurred in government spending.

Regarding how Ireland’s deficit compares with other countries, its actually lower than those predicted for the U. Kingdom and U. States. If I’m not mistaken, the EU calculates deficits slightly differently and, if calculated on the EU basis, it would be about 1% lower (11% rather than 12%). However, I’m not certain of that and won’t pursue the point until I check it out. Maybe some one here knows. For the record, France yesterday predicted a budget deficit of 8.2% this year and 8.5% next year, but their starting-position for government debt is much higher than Ireland’s.


You’ve upped your tax forecast considerably in the space of 2 months.

Well done!

This is what you wrote here on 5th August.


Dreaded_Estate Says:

August 5th, 2009 at 8:42 pm

The forecasting margin of error is much larger than 3%.

They are 3% off on the total for the first 7 months but that includes 4 months they already knew for certain.

Over the 3 months of the forecast they expected revenue of €10,754m but the actual revenue was only €10,179m. That is a forecasting error of 5.7% in just 3 months.

The July forecasts are even worse. They predicted revenue of €3,266m but the actual was only €2,880m. That is a margin of error of over 11%.

I would agree with Brian Lucey, can’t see revenue being above €30bn for the full year.


So, in August you couldn’t see the tax-take being ‘above €30bn’. Now you are forecasting that in the worst-case scenario it might possibly be ‘even as low as €31.5bn’. I’m glad to see that your reading of my posts in recent weeks has engendered a new spirit of optimism in you.

However, even your €31.5bn figure looks very pessimistic. As you pointed out yourself on 5th August, the slippage up to end-July was €575m (€10,179m collected against €10,754m projected). Now, today”s figures show that the slippage up to end-September was €965m (€23,706 collected against €24,671). So, it is slipping by an additional €200m a month. If we project that to year-end, it brings the slippage for the whole of 2009 to about €1,550m, which implies a tax take in 2009 of €32.9bn, rather than your €31.5bn. However, I don’t wish to appear dogmatic. These sorts of projections are always risky. I’m not saying your €31.5bn prediction couldn’t come true, merely that it will require a very severe acceleration in the rate of slippage in the final quarter of 2009.

In addition, there is another important point.

What matters is the DIFFERENCE between tax revenue and expenditure. If inflation is much lower than predicted, both go down. So, while the slippage in the tax take up to end-September is €965m, the slippage on the actual deficit is only €451m, because the same deflationary pressure that is reducing the tax take is also reducing the costs incurred in government spending. This €451 slippage in the deficit amounts to around 0.3% of GDP. So, its hardly earth-shattering in the context of the global economy of 2009, and certainly no reason for you to be ‘frightened’.


Except for the bit where you confidently assert that a prediction which remains unconfirmed has already come true, you’re absolutely right.

A question from a non-economist.

Non-Voted Expenditure has increased by (approx) €5.8Bn.

National Pensions Reserve Fund +€1.7Bn. Anglo Irish Bank +€4Bn.

Why, year on year has the NPRF increased by this amount to a rounded €3Bn as of September.

Will it increase again by the year end?

I have no problem with reserving for pensions but this seems odd.

Are they building a war chest for bank recap?

Another question from a non-economist.

Under Note 2 Non-Tax Revenue there is an item called “Pension Levy”. €4,188,000?

Is that the pension levy that caused consternation? Obviously I’m missing something.

If it’s not to stupid a question can somebody tell me how much the pension levy raised?

@Brian Lucey
“Jan Sept 08 total receipts 29,080,765 total expenditure 33,522,047
Jan Sept 09 Total receipts 24,365,058 total expenditure 30,352,444
Change Reciepts down 17%, expenditure down 10%.”

You’ve taken the wrong figure for 2009 total expenditure – that’s the voted expenditure. The total expenditure figure is €34,531,077,000.00… an increase of 3%

Given that inflation is running in the negatives, this is fiscal suicide of the highest order.


I think what’s going on is this:

(1) On the National Pensions Reserve Fund amount, this is headed for double the usual mandated 1% of forecast GNP, because bank recapitalisation (so far for AIB and BoI I think) is being funded from the NPRF and the Minister indicated that this would mean “pre-funding” the NPRF this year i.e. doubling the amount. Not 100% sure whether there’s any more to come from this head this year— I think that’s it for this year.

(2) On the pensions levy, you’ve highlighted another way in which the presentation of these accounts is not terribly helpful. My understanding is that a key feature of the pensions levy (which in part may explained why it is so named in the first place) is that it is not counted as a tax (nor indeed non-tax revenue)–apart from the €4m you’ve spotted, which is probably from Fas 🙂

If it were, it would likely show up explicitly in the Exchequer Account. It is rather, regarded as an “Appropriation in Aid” for each Vote—or in human language, it is accounted as receipts against which departments can offset their gross expenditure (there are other such receipts (some fees, some sales receipts, some EU funds etc.) Net these receipts against Gross Expenditure and you get Net Expenditure. It is (more or less) such Net Expenditure numbers which appear in the Exchequer Accounts. So the pension levy “washes’ out. Not sure whether the CSO and/or Eurostat will eventually regard this levy as in fact a tax, but in the world of the Exchequer, it’s regarded as an expenditure reduction.

The slight, but not very important twist, is that the Exchequer net expenditure numbers are not in fact net expenditures numbers, if you follow. They are issues of money from the Exchequer in respect of net expenditure to departments/offices. Some of the gory details of these things are covered in a department of finance guide which is at

On the substantive question, I don’t recall that we have in fact been given an estimated of what has come in on the pension levy, so far, but I stand to be corrected on this.

I guess markets and commentators ultimately work through these things, but I would think it is still a terrible pity that these central documents on our fiscal outcomes, so widely available, are in parts really unnecessarily complicated in presentation.

What slippage in spending? Current spending is up 3% regardless of deflationary effects. You can’t imagine deflation, you know, you have to actually cut the amount you are spending.

Oh and the exchequer deficit is looking like it will be 15+%

Good thing we have all those multi-nationals propping up GDP.

And as needs to be pointed out each month, they’ve already front-loaded corporation tax by changing the payment dates. Since the Christmas shopping season could be a bust, I wouldn’t be doing a victory dance about comfortably exceeding 30 billion in revenue just yet.

😆 Yeah I got it wrong, but so did many people.
No need to make it personal John everyone is just doing the best they can with how they see the numbers.

My old forecast of about €30bn could still be closer than the government’s forecast of €34.6bn at the end of the year. Not

All depends on how you see the numbers John.
You are forecasting €32.9bn, the government is forecasting about €32.6bn and for the moment I’ll stick with my forecast of €31.5bn to €32bn.

I have stripped out some of the corporation tax revenue as it is mainly ahead of profile because some payment dates were moved to earlier in the year.
I think we will see corporation tax will fall back to or below profile in November.

Also as I have said I only look at the forecast since May since the 4 months up to April were know at the time of the profile. That puts the government’s figures 6.8% below forecast.

Government forecast for the period were €14.5bn.
Actual receipts over the period were €13.6bn
6.8% below profile.

Even if you assume no further slippage in any of the heads except corporation tax I think an estimate of €31.5bn to €32bn is reasonable.

One other thing, you reckon the government is finished with ex-gratia payments to Anglo and any and all other banks for the year?

“Now that we are closer to the end of the year, and can be more certain about the outcome, its clearly game, set and match to Garret Fitzgerald.”

Actually no we can’t. As I’ve pointed out before self employed make their payments by 31st October while the bulk of Corporation Tax comes in on 30th Nov (for companies with 31 Dec year ends). The bringing forward of CT payments only relates to big companies. Most Capital gains tax is also due by 31st October. Christmas is also very important for VAT.

I don’t know which way these are going to go but they will have a big effect on the tax outturn. It’s why last year’s budget was so wrong – it was framed before this money came in.

I do agree though that those that predict armageddon don’t do themselves any favours as it allows opponents to play the man rather than the ball. The reality is the deficit is too big and has to be tackled – that means increase income or lower expenditure. It certainly isn’t going to stimulate the economy in 2010.

@ John

I try to read your posts and appreciate the points made,
Can you focus on the ball and not the man?
You are the only one, imho, on this forum that conducts posts at this level of agitation.
It makes for poor reading and dilutes the potential of your points.

Not that I am any form of shakespere, meself

yoganmahew Says:
October 2nd, 2009 at 7:55 pm

“I am presuming that this is the extra insurance levy?”

OK. Thanks for that.

Can I take it that the “real” Pensions Levy has been offset against the expenditure of each department?

If so, is this not a piece of bookkeeping hookery?

Is there a desire on the part of Government to keep the real figure hidden?

If it is the “extra insurance levy” it still seems a little light.

According to finfacts,

“In 2008, €28.50 billion of the total was generated by Life companies..”

I prefer to call the insurance levy a tax on savings and investment, but that’s just a personal observation.

If you took a single premium investment (in a life company, not a unit trust or OEIC) of €100k over twenty years at a growth rate of 7% before the levy and 6% after the levy the reduction in return is something like €66,000. That’s a hell of a tax on saving for your future.

That point about the deficit in the article was not important [you and Garret may find this hard to understand], the article said “approaching €30b” and was to give some context.There are much more important issues at stake here and I would say someone’s credibility is more damaged by not understanding what is going on that some possible error in a parenthetical forecast. This whole issue is a side-show to a side-show.And do you really have much more confidence in the predictions of the government who have much better access to information but nonetheless have a lousy track record?

While I enjoy John the Optimist’s posts, I do think it would be more constructive to keep the tone civil – except perhaps in the case of Morgan Kelly, if John is right about how wrong Mr.Kelly is.

That said, I think there is merit in people being reminded of their previous predictions on key issues – it is relevant (but obviously not definitive) re credibility.

Concubhar O’Caolai Says:
October 2nd, 2009 at 10:03 pm

“While I enjoy John the Optimist’s posts, I do think it would be more constructive to keep the tone civil – except perhaps in the case of Morgan Kelly, if John is right about how wrong Mr.Kelly is.”


So, maybe I don’t get this, but it seems you are saying if somebody is wrong incivility is acceptable. Or is it just if Morgan Kelly is wrong incivility is acceptable?

@ Al & DE

i think John’s input here is invaluable and he should be given some slack if his posts appear to come across as personal. As he has noted, a huge huge majority of posters on the site have generally been of the pessimistic variety in terms of their forecasts or opinions about NAMA, with some being excessively pessimistic and likely to come in quite wide of the mark. It’s far easier to jump on those particular bandwagons (in the same way that it was easy to jump on the Celtic Tiger bandwagon on the way up), particularly when in many situations we’re told that using positive reference material from most of the banks and stockbrokers is often meaningless as they’re a ‘vested interest’ or whatever. Other positive data on some fronts has been labeled coincidental or anomolous in anture. If there wasn’t an able number cruncher like John to get all the real figures together, some people could be forgiven for thinking that the economic apocalypse had actually occurred and all hope was lost. Keep up the good work John.

kevin denny Says:
October 2nd, 2009 at 9:51 pm

“This whole issue is a side-show to a side-show.And do you really have much more confidence in the predictions of the government who have much better access to information but nonetheless have a lousy track record?”

“more confidence in the predictions of the government”

Particularly when the Minister of Finance keeps saying that everything he says is an estimate.

Am I alone in finding John’s game, set and match comments somewhat lacking in factual basis?

As I noted in the piece that John linked to but decided to misquote

the 46 guys article used the phrase “close to €30 billion”. The blog post I wrote also noted that, as of July, the ESRI’s forecast for the Exchequer deficit was €25.7 billion. Since then, the incoming data has pointed to a bigger deficit — the government is now pointing towards a GGB of 12% rather than its April forecast of 10.75%. One would hardly have to add much on to 25.7 to get “close to 30”.

I write this not as someone who claims to be an expert in near-term budgetary forecasts and I would not expect to be judged as an economist based on this. But, for what it’s worth, as far as I can see, the idea of an exchequer borrowing requirement of close to 30bn (it’s already 20.1bn through September) doesn’t seem in any way at odds with the facts as we know them.

So I genuinely find myself at a loss to understand John’s game, set and match to Garret comments.

Of course, beyond the issue of how large will the fiscal deficit be, Kevin D is right and this particular sentence was in no way the central point of the 46 economist article. The fact that some people seem to have chosen this (rather than the points it made about NAMA) as the point of attack says$ something important about their ability to debate the key issue at hand.

@ Eoin

I agree that the input has value.
I question the formation of it.
Ya catch more flies with honey as opposed to vinegar!

Good night

Aidan Kane Says:
October 2nd, 2009 at 8:00 pm

“I think what’s going on is this:”

Thanks for that Aidan.

Tried to post a reply earlier maybe got stuck in cyberspace.


It is a war chest and they are cooking the books.

N’est-ce pas?

“i think John’s input here is invaluable and he should be given some slack if his posts appear to come across as personal.”

Strikes me as illogical. Why should he be cut any slack if he is getting personal. Let us focus on facts, shall we?

Nobody ever went bust estimating the risks to the upside. It is the risks to the downside that are solely of concern. That is, you do not go bust by being too pessimistic about the possible outcomes. You may not make as much money, but it is not an ‘all in’ strategy.

That, I believe, is the concern of what you call ‘naysayers’.

I would argue that blind optimism is not a strategy. It is not logical. It is not even hopeful, once you realise that it is blind.

@yogan: Don’t waste your time. A year or less and the folly will be clear for all to see. Already the tide of economic data is turning in the US as reality sprays weed-killer on those “green shoots.”

@ YM

“It is the risks to the downside that are solely of concern.”

i thought the point of this blog was to figure out the truth of the situation, not to figure out what the worst case scenario was? Shouldn’t it be renamed “” if so? Shouldnt we be as open to positive developments as negative ones, otherwise we would clearly have a bias in our conclusions?

@ Garo

if he’s getting personal but using facts, then why do you care? Anyways, my point is that its very easy to be civil and non-personal at all times when most of the other contributors are on your side and agreeing with you. Its often leads to group think, and its a bad thing. When you’re in a small minority i think you have the right to speak a bit louder and blunter (though nothing he has said was particularly personal), Don’t remember Churchill being polite when he was trying to get his point across.


So, maybe I don’t get this, but it seems you are saying if somebody is wrong incivility is acceptable. Or is it just if Morgan Kelly is wrong incivility is acceptable?”


Just a light-hearted remark really but I do think that if Morgan Kelly turns out to be as spectacularly wrong as John thinks, I think he has a lot of explaining to do.

The yea-sayers who got us into this mess have received plenty of abuse – and probably rightly so in many cases – so I think it should work both ways.

Concubhar O’Caolai Says:
October 2nd, 2009 at 11:18 pm

“The yea-sayers who got us into this mess have received plenty of abuse – and probably rightly so in many cases – so I think it should work both ways.”

Thanks for that, Concubhar, it gives me some clarity on the ad hominem attacks.

You are of course right. One should not accept at face value the yea or the nea.

I prefer to stick to facts if I know them and open my opinion to ridicule if I do not have fact.

I find I learn more that way.

Revenue is declining and will continue to decline. It will slow the decline because there are certainties in for example, the public service tax stream. But the general trend is still that the economy is worsening. Obviously.
Revenue that has declined is that dependent upon asset values. Obviously.
Revenue must therefore be raised from income to make up for the collapses in asset values which will continue to decline. Obviously.

Only when income taxes are high, will cutting public expenditure impact strongly upon revenue. So cutting expenditure may be premature, given that high taxes are coming. Obviously.

Deflation is taking hold and therefore a cut in public pay of 10-15% is appropriate. There was a precedent in the thirties. This time it is worse!


I am a nay sayer. (I hope I shock no one!) I wish it were the other way, but I am so truthful, I have been described, by RFV Heuston, RIP, as brusque! (I was asking that EY Exshaw be forced to stop reading his notes!)

There are people clouding the issues of fact and trend as they have additional interests to protect. Not all of the glee club are anonymous, shrill (DeLong-ism) shills. But many are. The IP addresses are known. If they were to be exposed at the right time, and linked to physical addresses, etc., the identities of the shills would become apparent and usefully expose their true interests.

But it would not change what is going to happen to the wider economy. It might alter perceptions on the matter of Nama! Particularly for those who do not appreciate that not all opinions expressed here are as honest as mine! There may be paid advocates twisting and moulding as fast as they can. There is after all, 60,000,000,000 euro at stake! There are a lot of crumbs to fall onto the floor here. Sadly, Irish taxpayers will be providing this money.

Expose shills? They have been given rope ……

I Tax from the self employed will fall more than trend. I’d rather not give my reasons! Let us just say that Revenue is so efficient, it is less than effective in certain areas!
Cutting public expenditure can be counter productive ….

From today’s Irish Times

The Exchequer borrowing requirement for 2009 is now likely to be at least €26 billion. This comprises the €20.35 billion borrowing requirement cited in the supplementary budget, the €4 billion that was subsequently injected into Anglo Irish Bank and an additional €2 billion as a result of the tax shortfall.

Is this correct or is the 4 million to Anglo already accounted for in the 20.35 bn? If Irish Times report is accurtate, then were the 46 guys not closer than Garret Fitz Gerald in their estimate?

Just checked DoF website, and I think the Irish Times might be doublecounting the Anglo 4bn.

Do you really work in financials?

The government is providing upside figures. It would be irresponsible not to provide downside figures. Some of these same naysayers gave their downside figures a year and more ago. Those figures have been met and exceeded.

What figures have you given for the budget deficit? For government income? For unemployment? For GDP & GNP?

OK class, a simple sum for you. 20*12/9 = ? Anyone?

And having answered that question, we can then discuss how the answer to such a sum might lead to a biassed estimate of what the 2009 figure will in fact turn out to be.

Incivility is not acceptable on this forum, full stop.

@ YM

i have no issue with you providing downside figures. They are of course extremely important contributions. However i wasn’t aware that this was a purely anti-government sounding post, or a blog dedicated to delivering negative scenario analysis. I would have thought that there was just as much onus on the contributors on here to look for positive developments as much as negative. In the end, the true picture can only be found by looking at ALL developments, positive or negative. Do you disagree with this assertion?

Also, not entirely sure where the “do you really work in financials” fits in with the “no personal or incivil attacks” clause we’re all apparently supposed to be adhering to.

This isn’t a blog dedicated to delivering negative scenario analysis IMO.

Most on here are simply calling things as they see them, whether that is positive or negative.

I’ll admit that things are slightly better than I thought they would be but they are still absolutely terrible.
And we are really only splitting hairs about the differences.

Apologies, you are right about the unnecessary ad hominem.

What I am concerned about is the risks that are being taken by the government both with the deficit and with NAMA. Public spending is still rising. Public income (despite large tax rises) is still falling. The national debt is still rising and Anglo is, as yet, an unqualified drain.

I fail to see the bright side in any of this for taxpayers?


I really don’t see that I was that personal or rude in my posts above, but sincerest apologies to anyone offended if it came across that way. I am that rare breed, (a strongly pro-United Ireland Northern Protestant), so it is possible that, along with the rest of my tribe, I am a bit more blunt in my use of language than the softly-spoken well-mannered people south of the border.

In my first post relating to the Garret Fitzgerald v Karl Whelan clash, I merely pointed out that it now looked as if Garret was correct. At the time of the debate, there were very offensive comments posted about Garret Fitzgerald (who is Ireland’s greatest-ever statesman, in my opinion), alleging that he was a bit senile at age 83. I am not referring so much to this site, as other sites. There were just one or two such comments on this site. But, I specifically excluded the ‘gang of 46’ from this. I said in my post: ” the gang of 46′ themselves were a model of politeness (fair play)”.
As for the phrase, ‘gang of 46’, I’m sure most people just treat that as humorous.

In my second post, addressed to Dreaded_Estate, I merely pointed out that he had upped his forecast considerably since August and that his latest one was much more optimistic. I can’t see where I was personal or rude. In fact, I congratulated him on doing so and suggested that his greater optimism might be due to reading my posts (that was just a joke). As a statistician, I think it is a sign of an agile mind that, when newly-published data indicates that your previous forecasts are likely to be wrong, you change your forecasts. I do it all the time myself as mine are often wrong. I wish that politicians would follow the same practice. In my statistician’s mindset, saying that he had changed his forecast was not intended to be in any way offensive. But, if Dreaded_Estate thought that I was being personal or rude to him, again I apologise. Just to note, his and my forecasts are now quite close (31.6bn v 32.9bn).

I don’t remember that I’ve ever been deliberately personal or rude about anyone who posts here, although I’ve often disagreed vigorously with them. But, again, apologies if, in the heat of the moment, it came across that way at any time. The only people I’m ever personal or rude about are Morgan Kelly, Vincent Browne, Declan Ganley, Gerry Adams, and that silly woman who runs the Shell-to-Sea campaign in Mayo, whose name I forget and have much better things to do than to try and remember right now. But, apart from Morgan Kelly (whose views on Lisbon I don’t know), the others are now licking their wounds after their well-deserved humiliation in the Lisbon referendum, so I will lay off them for a bit.

@ John

agreed re Dr Fitz. I recall comments being made on thie site about him living in his sons basement and lots of suggestion that some preferential treatment by AIB way way back in the day had influenced his current line of thinking. There was also comparisons with Nixon in terms of ethics, that he was arrogrant, fatuous and not competent to comment on NAMA, and that he should “depart the stage”. It was pretty shameful stuff to be honest, and while the vast vast majority of people posting here were very civil, there didn’t seem to be as much hoo-hah about those comments as there is about your far milder and more reasonable ones.

“particularly when in many situations we’re told that using positive reference material from most of the banks and stockbrokers is often meaningless as they’re a ‘vested interest’ or whatever.”

Brendan Keenan’s article on the deficit in todays Indo states “Exchequer borrowing is now set to reach €500m a week this year”.
The response from banks and stockbrokers-
Simon Barry, chief economist at Ulster Bank, said the €4.75bn in spending cuts and tax rises in the December Budget must now be seen as the “minimum to be achieved”.

Alan McQuaid in Bloxham Stockbrokers said the cuts in the McCarthy report must be made sooner rather than later.
“If this mean conflict with the public sector unions, so be it. The Government needs to put its foot down and show who’s boss,” he said.
Its not that the contributions from these people are meaningless, its simply
that they are so obviously biased.
Bail out the banks and their shareholders – massively cut essential services
and impose draconian tax increases. Now that solution may appear right to the bank and stockbroker economists but I venture to suggest that even the IMF might baulk at inflicting this level of pain on the citizen.
This small bunch of bank and stockbroker economists have far too much influence and are being constantly quoted without meaningful input from other less partisan economists.

@ podubhlain

well i’d call that more an ideology issue rather than a bias issue. We all agree (apart from David Beggs, aparently) that we have to get the deficit down, and quickly, but there is lots of room for debate as to how the mix of tax and expenditure changes get us there. My point was more that if a professional economist at a bank or stockbroker comes out with a positive spin on either policy or data, then its generally greeted with at best scepticism and at worst complete rejection by a lot of the nay-sayers prevalent on this site. At the moment most commentators on this site are still quite (or very in a lot of cases) downbeat about the prospects for recovery, but very often in life and economics its the outlying suggestions that signal the first signs of the change in the trend (ie recovery). This is as true now as it was when Morgan Kelly was ahead of the curve in predicting the crash in property prices.

“its the outlying suggestions that signal the first signs of the change in the trend (ie recovery).”

I cannot see any of those outlying suggestions. Watching the qualified people lining up for temporary Christmas jobs really brought home to me the extent of the malaise. 500 million a week borrowings (up from 400) demonstrates deterioration to my simple mind. A Government doing nothing but talk- the Greens with their escalating demands as the price for staying in Government – none of this would inspire confidence. |The unions threatening chaos – the taxi guys causing chaos -show me the green shoots please.

@ podubhlain

well the September live register are obviously a green shoot, though obviously we need to understand a bit more how the numbers are getting to where they are and if there are any significant explanatory factors. The surprisingly less bad GDP figures are also postively noteworthy, and combined with the jobless data led most commentators to significantly upgrade their economic assessments for next year. Yes, its only small crumbs and could still turn back down, but like i said, we have to explore the chances of it continuing to improve/stabilise just as much as we have to consider it being a blip and the downturn continuing.

Re the huge queues for the temporary work. I think the positive we can take from this is that 2 yrs ago the same people would’ve refused these types of jobs and instead looked to be real estate agents or builders or something involved in the property sector. I know its not nice to be in that queue, but i think an adjustment in our attitudes to pride and what we’re willing to work as is going to be an important part of our recovery process. I currently know a guy who is sitting at home on the sofa ‘waiting’ for a 60k+ a year job to just arrive on his lap.

Fair play John, I think more of misunderstanding than anything.

Great to have a range of views on the site.

The Economist has a piece this week titled: Please do feed the bears

Caution is certainly in order and on a BBC World Debate from Istanbul this evening, Goldman Sachs economist Jim O’Neill said another US stimulus may be needed in 6 months.

Who knows?

Optimism is good as well but it’s always relevant to consider what is not being said as well as public positions.

It was interesting during the Lisbon campaign how business groups and some companies got directly involved in the campaign but they steer clear of commenting on general domestic policy or the lack of it

Stockbrokers and big business generally strongly supported the drift of policy during the boom.

Who wanted to risk a shilling in the game?

One forecast that is likely to be realised is that stockbrokers will not identify cuts that will hurt various business sectors but the vested interests range from hospital consultants, professional cartels and across the spectrum to farmers.

“In my first post relating to the Garret Fitzgerald v Karl Whelan clash, I merely pointed out that it now looked as if Garret was correct. ”
No, you asserted Game set and match when we are two sets in.
As for GF : imho either he
a) engaged in a deliberate misreading of both the role in the letter and the nature of our comments on the deficit in the knowlege that this would be of benefit to the government given his formidable an mostly well deserved reputation
b) he really felt that this minor technical issue was more important than a deliberate overpayment of billions.
Your choice.

I see this weekend that some economists are calling for €5 billion in cuts (or savings) to be made in the budget. Just wanted to point out that €5 billion is equal to the pay of 200000 people at €25,000 each (or 100000 @ €50,000 each). I realize there might not always be a direct link between cutting public expenditure and cutting or saving jobs but what likely result will slashing public expenditure have on employment right across the economy over the next few years?

@Pat OC
Realistically government spending needs to be halved. Why? Income levels are unlikely to recover quickly, so tax income is unlikely to aswell. The deficit, however, must be bridged as with NAMA, the next few years of deficits and recapitalisation of the banks GGD is going over 100% (by the NTMA’s own figures). The limits of debt are being reached.

In addition, the Social Insurance fund will need to be replenished and some progress needs to be made in paying back the debt that has been taken on.

If some elements of the G20 have their way, banks will have an absolute leverage limit so the scope for Irish (and other) banks to fund the deficit through repo will diminish, short of further capital injections. So the risk of rollover problems increases for the state.

Finally, if the world economy does recover, we will see a pullback on exceptional liquidity support and a rise in interest rates (probably in that order?) which will put further pressure on current finances. We should not bank on inflation being any help given the ECB commitment to maintain it at an average of 2%.

So if the cuts were to fall proportionally, this would see 180,000 public servants lose their jobs (total numbers around 360,000 including health?). I can’t see this as either a realistic or a desirable outcome.

Where then are the cuts to be made and on what timescale?

Pat OC Says:
October 4th, 2009 at 2:14 pm

“I see this weekend that some economists are calling for €5 billion in cuts (or savings) to be made in the budget.”

Pat, and that’s just for 2010. €4Bn for 2011 and another €3Bn for 2012. (cuts or tax increases).

We are in 1982. There is still not widespread acknowledgement of the depth f the hole we are in (yes Mr Gilmore, thats directed at you) in the political classes. Until that emerges (which imho will take sustained emigration hitting at the families of even the politically priviliged) no real core solutions will emerge. Look at Gregs figures : where are we going to get €12b? Nobody has any desire to really really take an axe where needed.

Another thing to be recognised from the 80’s is the potential of tax increases to relaunch the black economy.

IMHO, if government starts increasing taxes, those with regular wages will want all sizeable transactions done in ‘cash’, while those on the other end of the transactions will be under pressure to knock off the vat/ do the transaction off the books etc.

I am unaware of any research work done on this, perhaps it is difficult to do so under the gaze of Revenue.
Alot of the construction industry will be in the shade for a few years before emerging back in the ‘white’ economy.


Brian Lucey Says:
October 4th, 2009 at 7:58 pm

“Nobody has any desire to really really take an axe where needed.”

But Brian,

They know something you don’t.

The economy is going to grow at 5% compound for the next five years.

Property “values” increase. NAMA is hailed as the foresight of genius. Banks are made solvent. Government in fiscal surplus. Windmills for everyone in the audience.

Yea of little faith.


Brian Lucey Says:
October 4th, 2009 at 7:58 pm

“sustained emigration hitting at the families of even the politically privileged”

The offspring of the politically connected and financially sound may be the only ones who can take the emigration route.

For those who don’t have political clout or money emigration this time may look bleaker than the 50’s. The outside world has changed. I think this time a lot of young educated people will stay put, or return after working out that the world has become a lot more ugly. There may be a social upheaval as well as an economic one.

Silly of me to forget that….

Now at the ECB , Gabriel Fagan did a nice paper in the JSISSI in 94 “measuring the size of Ireland’s Black Economy”. Its at
He concludes

“The available evidence indicates the existence of a significant black economy in Ireland. National accounts discrepancies together with official adjustments to allow for unrecorded incomes are consistent with the existence of a black economy amounting to around 5 to 6 per cent of GNP in 1992 while estimates based on various monetary based approaches suggest a range of 8 to 10 per cent of GNP for the same year. It is noteworthy that the various monetary indicators suggest that the share of the black economy rose significantly from the 1960s to the mid-1980s inline with an increase in the tax burden before falling somewhat in the remainder of the decade.
While black economy activity may result in some underestimation in the level of GNP, there is little to suggest that its growth rate has been markedly affected. Thus Feige’s claim that the size and growth of the black economy invalidates the use of official GNP growth rates for analysis and policy purposes does not seem relevant in the Irish case.”

Now, revenue are significantly more “tooled up” than in the past but even if this figure was to reach half of Gabriels estimates thats a serious chunk of activity.

@Michael Hennigan

Speaking of cartels, I heard a media specialist saying on the radio that web based media had not created as “much value” as it had destroyed. i.e. the internet does not generate as much advertising and subscription revenue as the print media. I found it quite humourous that the business journalists discussing it saw this is a bad thing and discussed it in terms of value being destroyed.

I can imagine that if a set of professionals and professional services were made redundant by advanced web services there would be rejoicing in the media and it would be described as variously increased efficiencies, removing transaction costs and a cartel busting. Obviously, I am not painting you with that brush given that you are a practising media value destroyer 🙂 !

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