Have been released by the Department of Finance. The toll of added social welfare and debt payments showing clearly through. I will let the comments decide whether the receipt estimates are realistic.
Have been released by the Department of Finance. The toll of added social welfare and debt payments showing clearly through. I will let the comments decide whether the receipt estimates are realistic.
20 replies on “Receipts and Expenditure Estimates 2010”
Before the usual suspects launch a barrage of posts claiming that they are not realistic, may I point out that for 2009 the deficit has come in very close to what Brian Lenihan predicted in his April budget and is actually less than what he predicted in his amended forecast made in October. This is confirmed in an article by Pat McArdle in today’s Irish Times. It now looks likely that tax will fall short by about 1.5 billon euros, but partly counterbalanced by expenditure being about 0.75 billion euros less than he budgeted for. Both are partly because the inflation rate is 2% to 3% less than was forecast earlier in the year.
There are various definitions of the deficit, but, again according to Pat McArdle in today’s Irish Times, the one that matters most, the general government deficit, will be between 19 billion and 20 billion euros, and under 11% of GDP, compared with the 12.5% the EU forecast some months ago, and well below the deficits for Greece and the UK. Without wishing to be boastful, I have predicted for months that the deficit would be circa 11% of GDP. I will not mention the dispute between Garret Fitzgerald and the ’46’ regarding the size of the deficit in 2009, as recent experience has shown me that any reference to that dispute may result in the post being removed.
Regarding the tax take, I had a very heated debate here some months ago, when I challenged some posters who predicted that the tax take in 2009 would be under 30 billion. I predicted 32.9 billion on 5th October. It now looks like my prediction will be very close. The predicted meltdown in tax receipts in November failed to materialise.
I further predict that this thread will receive few posts.
60 million less for minister of children office. arts, sports and tourism gets slightly more. have to wait until budget day but this would leave horse and greyhound fund intact. some discussion of priorities would not go astray in the run up to next week. again, its hard to pre-judge without the budget speech but given its strong role in Bord Snip, it would need to be compelling before one could accept that finance itself needs an 11 million increase. in general, its hard to identify any major area where cuts are being proposed on a nominal basis which is particularly striking given what’s happening to prices. Why, for example, is environment and local government being allocated an extra 46 million, and an extra 50 million for current transport spending? This could be partly excused if these were attempts to plug leaks in job numbers but there is no active attempt to do this by the government. I will wait until the budget speech but this looks seriously wrongheaded.
from what we know so far about the budget, the estimates do not reflect the 700 million or so to come off the capital programme. the strong signal from the media debate is that a further 700 million or so will come from social welfare budgets and then 1.3 billion sprinkled around the current pay side (but unknown yet how). but we do not know yet how much will come off the current budgets referred to above so final judgment of course needs to wait until after the speech.
Liam, it’s just an extrapolation based on a no-policy-change assumption, the expenditure changes, current and capital, will be announced Wednesday.
sorry colm – badly phrased comment on my behalf. from media debate, assuming a four billion decrease and incorporating the obvious decreases in capital, health and social welfare then much of what is spoken about above still goes ahead. but obviously need to wait until speech .
John the Optimist, the white paper shows GGB of 11.75% for this year and 13.5 for 2010 under unchanged policies — that’s not “under 11% of GDP” and definitely not “well below the deficits for Greece and UK”; Greece, our fellow eurozone member has deficit under Commission forecast of 12.2% this year and 12.8% next year, lower than Ireland under unchanged policies.
@Liam Delaney
We can now add on the €11Bn put into the banks so far. Given the scale of their property losses we are never seeing that money again. That gives us a real deficit – the one that should surely count – of €30 bn going on Mr Optimist’s figures. Next year we have to add on the NAMA losses…
As a super low tax economy I can’t understand why the tax base has not been widened and the 7.5bn given in tax breaks curtailed. Cutting over 300m from the health budget will only hurt the vulnerable. We need to address the structural issues surrounding our tax revenues if we are to reduce our borrowing requirement.
@John T O
“There are various definitions of the deficit”
And everyone uses the one that suits them.
As an accountant the P&L (exc Capital spend) looks like this per the table
2009 Income €33.4b, Exp €45.5b, Loss €12.1b
2010 Income €34.3b, Exp €50.2b Loss €15.9b
If the state were a company this is what we would see. (The reduction in Capital Expenditure is a cashflow item) Ireland inc is running at a big loss and the €4b savings (exc any capital element) maintains the status quo. The income side does look optimistic. November tax figures shows CT is down 25% in 2009. Income tax is down 10.2%. Can’t remember the VAT but it wasn’t pretty. These estimates suggest income tax will actually increase, while VAT is stable. A mite hopeful.
If these were my estimates in the days I worked in a PLC I would be nervous.
Treading water after €4bn of expenditure cuts and before €500mm of Carbon Tax.
Capital expenditure reducing from €14.6bn to €7.7bn.
If I’m reading that correctly it is bound to affect tax receipts year on year. No?
Non-Tax Revenue from €843mm to €2,355mm.
Credit Institutions (Financial Support) Scheme from €0 (2009) to €1bn (2010). Didn’t they pay anything in 2009?
Opps,
Capital expenditure reducing from €14.6bn to €7.7bn.
That was the €4bn Anglo and €3bn NPRF.
No more money to banks in 2010 then, unless by conversion of Preference Shares.
Under a no policy change assumption, surely we can pencil in the Anglo Irish black hole for a few billion, while AIB and BoI will surely also need a few more billion.
If the EU are telling AIB to suspend some coupon payments on existing debts, how can they pay for the cost of the guarantee? Looking for a billion in revenue from the banks under this heading is as fanciful as the Labour party asking the tax exiles to cough up 100 million.
constantin gurdgiev’s analysis is below.
http://bit.ly/54g59e
Those who suggest that we should extend the period of our budgetary adjustment are, implicitly, suggesting that we pay an ever increasing share of our national income in interest expense.
On Page 8 of the 2010 Estimate, the cost of servicing the national debt is expected to rise from €2.664bn (2009) to €4.617bn (2010). That is an increase of €1.953bn.
When one compares that to an employed workforce of 1.938m people (CSO data for April-June 2009), that means that the expected INCREASE in our interest bill next year will be equivalent to over €1,000 per person employed.
Yes, the published figures have a look of fiction about them. Even the tax figure for 2009 still seems incredibly high, despite a great performance by the multi-nationals, running profits through Ireland.
The tax figures for 2010 also look a bit on the high side. I also came across this commentary on another site, which seems to support Dr. Gurdgiev’s view.
http://www.progressive-economy.ie/2009/11/likely-tax-yield-in-2010.html
@Frank Galton, Stuart Blythman
As I said in my first post, there are different definitions of the deficit. The difference between the General Government Deficit and the Exchequer Deficit are well known by now, given that there has been so much debate on this site about which one is the more appropriate to use. In addition, Eurostat calculates deficits slightly differently to the Irish Government, and the Eurostat caculations usually knock off close to 1 per cent from the Irish Government’s calculation. It is not a matter of picking and choosing, it is a matter of always comparing like with like.
The figures in my earlier post were taken from Pat McArdle’s article in Saturday’s Irish Times (page 8). In the article (paras 4 and 5) he states:
“The 2009 General Government Deficit was projected at 10.9 per cent, now it is estimated at 10.75 per cent, and it could turn out to be a shade less. The important thing is that the Irish Government delivered. It did not escalate to 12.5 per cent as forecast by the EU.”
I assume that, to arrive at these lower figures, he is using the Eurostat calculation of the deficit. However, rather than get bogged down a per cent here and a per cent there, according to which definition of the deficit we want to use, I will simply make two broad points:
(a) In opening the thread, Liam Delaney said: “I will let the comments decide whether the estimates are realistic.” I am merely making the point that the estimates published in the April 2009 budget have indeeed proved realistic, depite the fact that numerous posters here and numerous media economists have claimed all year that they were not. Among those who claimed that they were not were Constantin Gurdgiev and Progressive Economy.
(b) In the debate between Garret Fitzgerald and the ’46’, this time it really is game, set and match to Garret. Even on the worst definition of the deficit, it comes nowhere near the 30 billion the ’46’ predicted.
@John The O
My point isn’t about who’s right or wrong. You can have an awards ceremony later.
We’re going to lose €12b this year and after €4b of current expenditure cuts we’ll still be losing €12b next year. (That assumes the cuts don’t affect income) This is on DoF figures.
Those figures assume the worst is over in terms of income tax and VAT (in the estimates they are either slightly up or flat). For all I know they could be right but it’s a bullish prediction.
@JohnTheOptimist
If the out-turn came in much as predicted in April, how do you explain this:
http://www.finance.gov.ie/documents/publications/other/2009/maastrlett09.pdf
(22 October 2009)
“The projected General Government Balance (GGB) for 2009 shown in the EDP tables is -€19,982 million or -12.0% of GDP, which shows a worsening of €1,569 million on the April 2009 forecast deficit of -€18,413 million, or 10.7% of GDP.”
So it seems clear that the government has missed by a fair amount from the April estimates.
You neglect to mention that Mr. McArdle is reflecting on the fact that the government look like it will beat its estimates of late October…
“The figures in the White Paper are little different from those in the Pre-Budget Outlook released a few weeks ago.”
Hurrah, we’re all saved. The DoF is now missing to the upside over a timeframe of only a few weeks.
You are also being a little disingenuous about the 46 debate with Mr. Fitzgerald. He was talking about GGD, they were talking about borrowing requirement. Neither of them made it clear. The 46 factored in extra funding requirements that Anglo said it required. Anglo has since said it requires 5.7 bn to continue as a going concern, but the Minister has deferred this until next year… no doubt it will be cheaper then.
@Yoganmahew
It is also striking that Fitzgerald, together with Alan Dukes, bailed out AIB on favourable terms during our last fiscal crisis and is an enthusiastic supporter of the same course of action in our current fiscal crisis.
Many members of the NAMA lobby believe that by using the power of positive talking they can convince sceptical foreign observers that our deficit, although really €30Bn, is “technically” €19Bn. I am afraid they will only succeed in fooling gullible people in Ireland.
The figures suggest a disconnect from the political reality of this administration. The need for both to alter is clear. An Agenda will only come about through more strife. Expecting an imminent pick up is policy, all economic analysis to the contrary. Where will the strife appear first? When will the policies change, necessitating more taxes? Who has to suffer?
Stuart’s reminder is shocking. QAs ECB rates pick up from emergency historic lows debt servicing will make it all worse and the only way it will stop is for lenders to say no. But since the funny money rules, we can expect genuine concern at maybe, 150% of GNP.
Remember Japan. Remember Iceland. Charles J Haughey!