Month: November 2010

Government Plans €6 Billion Adjustment in 2011

The government have released a ten-page document outlining its plans for the level of adjustment in the upcoming budget and also some details on growth projections and adjustments planned for future years. Here‘s the press statement.

The summary:

The Government has agreed on an adjustment of €6 billion for 2011 and this will reduce the General Government deficit to around 9¼ to 9½% of GDP next year. Taking account of the €15 billion consolidation package, my Department now expects annual average real GDP growth to be 2¾% over the 2011 to 2014 period.

The government have also released a note on the accounting treatment of the promissory notes. The key point:

the terms of the promissory notes will provide that no interest will be chargeable in 2011 and 2012.

I’m guessing these are newly-negotiated terms, though I’m happy to be shown that this is not the case.

In any case, the bottom line is that this €6 billion of adjustment will have slightly more effect on the GGD than the approach I had been recommending. I had been recommending €7 billion but that figure included €1.5 bilion for the promissory note interest, which does not apply now.

There is lots to absorb in this plan but, for now, let me say that I think the govenment have taken the right decision in relation to the size of the planned adjustment. Now we just have to see if they can get it passed.

Portrait of a market

With Irish 10-year bonds at 7.601%, a little escapism is called for: Federico Etro has a nice piece on the market for art.

Responding to the Jobs Crisis: Brian Nolan on Social Welfare, Employment and Unemployment

Brian Nolan addresses interactions between the benefits system and unemployment in the fourth part of the Irish Times Jobs Crisis series (article here).   Among the topics: unemployment traps due to high overall replacement rates; the relative importance of labour demand and supply factors in the rise in unemployment; the (limited) need to adjust social welfare benefits in line with changes in other incomes; and the importance of providing meaningful work opportunties as part of soical employment/benefit conditionality schemes.

October Unemployment and Exchequer Returns

Two pieces of moderately good economic news. The Live Register declined by 6,600 on a seasonally adjusted basis in October and the standardised unemployment rate fell by a tenth of a percent to 13.6%.  Also the October exchequer returns show that tax receipts, which had been falling behind target for a while earlier this year, are now slightly above target. Overall, the non-banking component of the deficit for 2010 appears set to not be too far off the target set last December.

Responding to the Jobs Crisis: Liam Delaney on Training

Liam Delaney draws on the policy evalutation literature to offer an agenda for the reform of training and education policies (article here).  Among the topics: the nature of required traning; the graduate unemployment problem; the importance of early childhood and lifelong learning; and the scarring effects of unemployment.