57 thoughts on “Presentation on the National Recovery Plan”

  1. @ grumpy

    On the plus side the resultant nuclear catastrophe would create more jobs than Finna Fails/Greens ‘Smart Economy’ would, through clean up costs etc.. NAMA having already destroyed the property market and service industry.

  2. I think we should congratulate the author(s) of this presentation fulsomely. The ability to operate a keyboard so proficiently while having so many fingers crossed is truly remarkable.

  3. Thank you Philip Lane.

    From p.11 “Absent an independent currency, Ireland must regain lost competitiveness by reducing its costs relative to its main trading partners. This process is well in train.”

    Really? the Irish Times today carries two stories which queer that ambition. UCD apparently has been running its own ‘unlawful’ ATM for senior staff for years, and PAC again has drawn attention to tendering defects in the public service, e,g, exorbitant legal fees and a prison service contract of some from that increased 3000%.

  4. As a brief for someone sent out to answer questions this is an admirable compilation.

    As a public document it is poor, overlong, sticks to jargon such as tax expenditures (meaning allowances and deductions), mixes typefaces and has appalling graphics. The chart between pages 10 and 11 refers to OST. I wonder where that is?

  5. If this is all we can come up with in terms of a National Recovery Plan, we are doomed.

    It is essentially a fiscal report concentrating almost exclusively on measures taken to correct the public finances.
    I looked for specific job creation measure in the 59 page document. Finally on page 56 I found the following

    “Measures will be taken for the key labour intensive sectors where
    employment growth can take place:
    – Agri-Food
    – Tourism and Travel
    – Retail and Wholesale
    – Construction.”.

    “Measures will be taken”—–Jesus Wept!!! With 450,000 people unemployed, “Measures will be taken….” and on page 56 of 59!!

    If comment on job creation is left to page 56 of a 59 page document, then it is crystal clear that job creation is not a priority in the authors of this document.
    That is the shameful fact of this document.

    The document might as well have been written by the EU/IMF team in the Dept of Finance or by the bondholders that we are destroying the country to pay back.

  6. How will we get growth in agriculture and tourism if the Climate change bill is passed?

    Anyways seems like the department are proud of contributing towards the out of control inflation we had in 2000-2008, see page 19.

  7. “Ireland must regain lost competitiveness by reducing its costs”

    Er, I was just reading in the Irish Examiner how all my costs are going to go up in 2011…. 🙁

    I can only see smaller employers facing another year of rising costs and customers with lower price expectations. Treble emigration and redundancies all round then.

    Recovery? What recovery?

  8. @Joseph

    The December inflation figures for EU countries came out this week.

    Ireland’s annual (harmonised) inflation rate was MINUS 0.2%.

    All others recorded POSITIVE (harmonised) inflation for December.

    For the Eurozone, it was PLUS 2.2%.

    For the EU as a whole. it was PLUS 2.7%.

    For the UK, it was PLUS 3.7%.

  9. So the Expenditure Savings – “will include a scheme for the metering and charging of domestic water by 2014, and increasing the student contribution to the costs of higher education.”

    Savings?

  10. Where can one find the figures for the public sector pay bill (excl pensions) over the last couple of years? gross and net

  11. It is a dishonest document.

    It airbrushes out the continued contraction in the economy in 2010. So, p.5 “The Irish economy experienced an extremely sharp contraction in 2008-2009…..In overall terms real GDP fell by early 11% over this period while the fall in real GNP was even larger at almost 14%”.

    The actual declines from the peak to Q3 2010 are real GDP -13.5% and real GNP -20%. The latter qualifies as a Depression.

    In the actual, misnamed NRP it is stated the projections are based on nominal GDP of €157.3bn GNP of €125.5bn in 2010, which would be -1.5% and -4.4% in nominal terms. To reach the DoF forecast of 0.25% real GDP in 2010 the economy would have had to grow by 3.4% in the final quarter, based on current data. It is on this outlandish projection that the entire ‘stabilisation’ narrative rests.

    But then to focus on the reality of continued slump in 2010 might pose the question why €14.6bn in govt. spending cuts and tax increases over two and a half years did not previously lead to a Recovery, and why almost exactly the same amount will do the trick this time.

  12. @Anonym
    The first paragraph from your North Korean link could just as easily be about Ireland.

    I mean, if you read the paragraph below, would it sound right?

    “The “Ten-Year National Economic Development Plan” released over the weekend by the Irish Government looks less like an economic development plan and more like an effort to avoid responsibility for the failure to complete the construction of the strong and prosperous state by 2012.”

    @Ahura
    These are “savings” in that the government will reduce the practice whereby it permits you to keep some of your own money. Ultimately, if the government saves enough using these practices, no-one will have any money at all. It will all have been saved.

  13. Stirring stuff
    P14 confuses stocks and flows: the rate of investment (/GDP) doesn’t tell you anything about the stock of physical infrastructure.
    P20: the recent deflation is apparently evidence of a “remarkably flexible economy”. Really? As opposed to what?
    P22 is also a cracker: the absolute level of employment is one of our great strengths. Most of us would want to know about the rate of unemployment.
    Part of the Great Leap Forward is a “targeted 25% decline in regulatory burden”. Anyone know how this is measured?

  14. @Michael Burke
    “It airbrushes out the continued contraction in the economy in 2010. So, p.5 “The Irish economy experienced an extremely sharp contraction in 2008-2009…..In overall terms real GDP fell by early 11% over this period while the fall in real GNP was even larger at almost 14%”.

    The actual declines from the peak to Q3 2010 are real GDP -13.5% and real GNP -20%. The latter qualifies as a Depression.”
    I don’t believe either your or their figures are entirely correct.

    According to the qna:
    http://cso.ie/releasespublications/documents/economy/current/qna.pdf
    GDP 2007 constant prices: 186,609
    GNP 2007 constant prices: 163,415
    GDP 2009 constant prices: 166,345
    GNP 2009 constant prices: 138,161
    Falls:
    GDP: 10.8%
    GNP: 15.5%

    In current money terms the falls were:
    GDP: 15.7%
    GNP: 19.4%

    Of course, using a negative GDP deflation (based on ongoing deflation) is, in my view, a mistake as it understates the contraction in the economy. I agree with you that it is all but a depression.

    “In the actual, misnamed NRP it is stated the projections are based on nominal GDP of €157.3bn GNP of €125.5bn in 2010, which would be -1.5% and -4.4% in nominal terms. To reach the DoF forecast of 0.25% real GDP in 2010 the economy would have had to grow by 3.4% in the final quarter, based on current data. It is on this outlandish projection that the entire ’stabilisation’ narrative rests.”
    I’m not sure where you get the figures for 2010 from? As far as I can see, the cumulative Read GDP for Q1-3 is 124.1bn and for GNP 99.6bn which looks like it will give a minimum out-turn for 2010 of GDP 165bn and GNP 131bn.

    Which is still less than the DoF are predicting.

    Note, I’m not disagreeing with your criticisms of the numbers, just with the numbers you supply as alternatives! Though I may be counting wrong?

  15. Overall, this is an excellent document. The Department of Finance should be congratulated. It makes many excellent points, covering a wide range of items. My only complaint is that they should have been making these points last year. As entirely predictable, nearly all the posters so far have done nothing more than sneer at it. This is not a reflection on the document itself, but on (a) their psychological condition – they decided they’d sneer at it before they had even read it (b) their lack of knowledge and statistical expertise, which renders them incapable of understanding many of the points made.

    I particularily welcome how the report highlights Ireland’s extremely favourable demographics. I have made this point myself many times on this site. A copy of the chart (page 7) showing population age-structures in EU countries over the next several decades should be printed on the back of the Christmas Cards that the next Minister of Finance sends to his counterparts in other EU countries. That will shut them up. I am also pleased by their highlighting of how relatively well-educated Ireland’s population now is in comparison with most EU countries, how the infrastructure has improved due to the high level of investment over the past decade, how price competitiveness is rapidly improving, and so on.

    At the end of the day, it matters little how gobsh*tes on here or followers of the Morgan Kelly cult react to it. It is how business and commerce reacts that matters. Here, the signs are increasingly good. There is now a major investment being announced on an almost daily basis. Last Saturday, it was Intel with 250 new jobs. On Tuesday, it was Quest in Cork with 150 new jobs. Today, it is Valeo in Tuam with 100 new jobs, plus several smaller ones. All that in a week. It is significant that these are all expansions of firms allready operating in Ireland, a vote of confidence in the Irish economy. All this is too late to save FF, of course, and FG will most likely be the main beneficiaries, but the great compensation will be the pleasure derived from seeing the pain and anguish that so many posters on here experience as the next economic boom gathers momentum.

  16. “the great compensation will be the pleasure derived from seeing the pain and anguish that so many posters on here experience as the next economic boom gathers momentum.”

    Squadron-Leader to Control-Tower! All pigs fuelled, and ready for take-off!

    Page 26 shows Health spending increasing by 10bn or 186% over 8 years. 70% of that is salary related. Meanwhile the obesity epidemic continues.
    How much money is spent on obesity prevention?

  17. @JTO
    People who live in well remunerated statistical cocoons, like the people who put that document together should go out into the real world some time.

    Page 11. There has been a significant reduction in the cost of electricity for
    large users. Really?. My organization has experienced a 15% electricity increase in the past 12 months.

    Where was the jobs target in the document that would be “career challenging”?
    Where were the targets for employment in the Recovery Plan?

    It is an election manual for Losers that will be binned within two months.

  18. The Department’s estimates for 2010 are very similar to the latest ESRI estimates for 2010, published in their Quarterly Economic Commentary yesterday. Both have substantially revised up the estimates for GDP in 2010, as compared with just a few weeks ago. ESRI’s estimates for 2010 are substantially revised up, as compared with their previous Quarterly Economic Commentary in October.

    ESRI are now estimating that GDP in current prices was 159bn in 2010, as compared with their previous estimate of 157.9bn. ESRI are also now estimating real GDP growth (ie at constant prices) of +0.25% in 2010, as compared with their previous estimate of -0.25%. As Michael Burke, said that that would require real GDP growth of over 3% in Q4, and it would mean that, in current prices, GDP was 8% higher in Q4 2010 than in Q4 2009. On the basis of ESRI’s forecasts, either the GDP growth figures for Q4 will be very good, both in constant and current prices, or the figures for the first 3 quarters of 2010 will be revised up.

    Let me make it quite clear. These are not my forecasts. I am merely interpreting the ESRI forecasts. I have no idea whether or not they will prove accurate, and no idea whether or not ESRI get any advance information from the CSO about how the estimates for GDP are progressing. Remember, we are talking about a period that is allready over, so it is not like forecasting the future.

  19. Hi..
    Sorry to post this again..put it on the emigration thread..,but it might be relevant to the comment JTO has just made about the accuracy of ESRI and CSO figures.

    ——-This is from the indo today…“Sadly, mass emigration is back, after two decades of healthy employment. According to today’s forecasts from the Economic and Social Research Institute (ESRI), more than 100,000 people will leave the country over the next two years.

    We cannot be more precise than that because, inexplicably, the ESRI declines to give its actual estimates. This follows similar coyness from the Central Statistics Office about providing — admittedly uncertain — figures for migration.

    What does the indo mean when they say ” the ESRI declines to give its actual estimates” and “similar coyness from the Central Statistics Office about providing — admittedly uncertain — figures for migration.”.

    I had understood that the basis for their projections were known?

  20. Hoganmahew

    You number for real GNP in 2007 is incorrect. It was €160,299.

    But you have ignored my point, even while quoting from it. I took the peak level for output in Q4 2007 and compared that to the latest data available for Q3 2010. This is the actual continued contraction.

    The 2010 full year projection is taken fom the Annex to the actual NRP, not this latest apology for it. To calculate the growth required to meet the projections it is necessary first to register the cumulative growth to date. But, since GDP has contracted throughout 2010, the quarterly growth rate required in Q4 is from the low-point in Q3, and, without significant upward revisions seems unfeasible.

  21. @Muireann Lynch

    This is true, but I was thinking more about ESRI being told informally and in very general terms that GDP estimates for previous quarters were being revised up or that the figures for Q4 were looking good, or some such like. But, I have no idea as to contacts, informal or formal, between the CSO and ESRI. I am merely curious as to why ESRI have made significant upward revisions to their estimates for GDP in 2010. In their October QEC, they forecast -0.25% growth in GDP in 2010 and GDP of 157.9bn in 2010. In their latest QEC, they forecast +0.25% growth in GDP in 2010 and GDP of 159bn in 2010. These are quite large revisions, given that there is only one quarter of the year left. Offhand, I can think of only 3 possibilities: (a) they are wrong in their latest upwardly-revised estimates (which I hope won’t be the case) (b) they have been informed that figures for the first 3 quarters will be revised up or (3) they are predicting very strong growth in Q4, whether derived from their own calculations or being told informally that the figures are looking good for Q4. I have no idea which of these it is, but it has to be one of them. If you can shed any light, please do so.

    Regarding Ron’s question, I hope to post a comment late tonight, but going out now.

  22. This sort of stuff is kind of like the bits in a cricket commentary where the commentators have to say something but there is nothing really happening.

    I wouldn’t be amazed if there was 3% GDP in Q4. Its is very difficult to forecast quarterly GDP numbers in any useful way in mature economies. Ireland’s economy is bifurcated, distorted by the effects of a semi-detached MNC sector and generally a sort of volatile high beta function of international trade and debt deflation. Stop it. Just put a big uncertainty fan on the graph with your highlighter – its more honest.

    Economics has its uses, but forecasts are usually of far less worth than is a general consideration of the arguments that are they are based on.

    This graph illustrates the limitations nicely:

    http://av.r.ftdata.co.uk/files/2011/01/MontierGraph.png

  23. Was it JK Galbraith who asserted that economists do forecasting to make astrology look respectable? A forthcoming book by US academic, George DeMartino, ‘The Economist’s Oath’ is being previewed as making the case for an ethical dimension to economics and, in particular, questioning the validity of analysis and forecasting that is based so narrowly on the neo-classical economics canon. Any interesting development in institutional or behavioural economics that might reveal cracks in the neo-classical temple is battered and abused until it is considered fit to dwell with head bowed in the temple.

    The existence or not of Keynes’s ‘animal spirits’ has a great bearing on GDP growth and economic activity, but they don’t fit comfortably in the canon. But we know what policies will squash them and what policies will release them. The DoF mandarins seems to be keeping their fingers crossed that these spirits will be released, but they seem to have no idea that many of the policies they are pursuing are squashing them. And why would one expect them to? These are people who never took a risk in their lives and whose ascent through the ranks to positions of influence and secure high incomes for life was predicated on making their political masters look good – irrespective of the objective reality.

    This document reveals more about the spin-machine than it does about the economy.

  24. The connection between cost savings and the government’s NRP seems to be accident prone if not downright mercurial around the edges. Another €60 million foregone to silence the bleating of vested interests according to the Irish Times. Don’t expect to hear much from the Greens on this matter, despite their curious messianic adherence to passing the Finance Bill. If the government is unwilling to push through taxation reforms that impinge on landlords (many are doing nicely from Social Welfare rent support), the taxes will have to be raised from the less fortunate – again.

  25. @Ron

    I posted a rather-inadequate comment on your question re Irish Independent in the Emigration thread.

  26. @Seafoid

    re
    All in this together .

    The blind man’s allowance is cut two years for two years running.
    For developer friends there is billions of support from NAMA (the taxpayer), an open cheque book for the banks to offset developer losses, a transfer to your wife legal out being promoted and allowed, and now you can still get those those tax breaks we set up for you.

    BTW. What is this about being insolvent if the tax breaks are removed. Tax breaks are generally of use only if you are making profits. So here is proof posiitive that the there are several friends of Fianna Fail still making rental profits that they want sheltered.

    I wonder if any TDs who double up as property moguls had their mits on this one.

    debt written of

  27. This is not a plan! There is no concrete proposals here! This is just rubbish projections and math exercises. Further mindless waste. A PLAN gives concrete proposals. THIS IS NOT A PLAN.

  28. Chart: Exports supported by improving competitiveness: Forecast change in unit labour costs, 2009 to 2012

    Ireland is the only country to show a decline; Germany’s Kurzarbeit short-work scheme peaked at 1.5m people and its unit labour costs went up – – don’t be surprised when they fall soon! Meanwhile, exports from the Irish pharma/medical device sector, accounting for more than 60% of merchandise exports, rose 38% in the period 2004/2010 but employment hardly changed.

    Prof. Patrick Honohan, Nov 2010: “With the structural shift towards high-productivity sectors during the 1990s and again since 2007, unit labour costs tend to fall even if wage costs for any individual firm or industry are increasing. Because of this shifting composition effect, as has been well-known for decades, but is routinely forgotten by superficial analysts, unit labour costs are a false friend in judging competitiveness developments for Ireland.”

    Which brings us to the Department of Finance and despite its failure to stand up to politicians during bubble time, it issues a spin-laced document that could have the harp seamlessly interchanged with a more toxic logo, FF.

  29. The problem with projections in general is extrapolation from current conditions on the assumption that these will be replicated in the future. This goes for demographics just as much as economics. You end up with HSBC projecting that India will be a first world economy by 2050.

    UBS are projecting a 25% increase in the Swiss population by 2040 based on the 50,000 net immigration of today continuing into infinity. It looks very like the NCB 2020 work.

    Ireland s demographic future could look great if ireland gets out of the debt deflation trap. A few debt to equity swaps might work wonders.

  30. @jto.
    saw your post…interesting stuff.
    good to get into the nitty gritty of what can be relied upon and what cant. the quality publicly accessible figures is pivotal to the anecdotal vs quantitative arguments that feature so often on this site.

  31. grumpy

    You are spot on about volatility in the qtly macro numbers, I have been arguing for ages that the information content of each new release is close to zero. The demand for news however exceeds the supply……

  32. @ Aine

    Agreed. I think some people are already becoming good at forgetting about the levels of debt we have taken on and will have to service for years to come..and the subsequent knock effects of this in all areas…we are just beginning to see it now in pay packets throughout january..

  33. Lex is a bit more chirpy

    http://www.ft.com/cms/s/3/9e4475e8-22e7-11e0-ad0b-00144feab49a.html#ixzz1BtwzhVjf

    Ireland

    Published: January 18 2011 09:45

    Somebody should have bought Brian Cowen, Ireland’s prime minister, a drink a long time ago and told him the news – that he is toast already in the financial markets. It should not have required Tuesday’s confidence vote by Fianna Fáil party colleagues, which he survived, to make clear that he was living on borrowed time. A general election expected in the spring should see Mr Cowen ousted. His handling of the banking collapse, from the moment a blanket guarantee was given to all creditors, has ruined the Irish economy and threatens a decade of austerity and shrinking incomes.
    Happily, Ireland’s medium-term political outlook should not worry investors, regardless of who is at the helm. After its €85bn bail-out, the country’s borrowing requirement is covered until 2013. The opposition, which is expected to form the next government, is arguing for a renegotiation of the bail-out, but this is unrealistic. It may be possible to haggle over the cost of the rescue funds, which carry an average interest rate of 5.82 per cent, but that rate looks like a bargain, with Irish 5-year paper yielding over 7.5 per cent.

    There are other ways to reduce the burden of the bail-out and ballooning debt. One is to ensure that the minimum is tipped into the banking black hole. That may require imposing pain on senior creditors. This deserves to become an election issue, not least because the guarantee cannot continue forever. The other way is to foster robust growth. There are encouraging signs on that front. Total exports last year were €161bn, roughly equivalent to the country’s gross domestic product. Ireland also has a healthy trade surplus, second only to Germany in the European Union. So it is not all doom and gloom.
    To overcome Mr Cowen’s disastrous legacy, however, a successful heave against political cronyism is essential.

  34. @seafoid
    The FT says:
    “the country’s borrowing requirement is covered until 2013.”
    Or indeed, to some date earlier than that 😕

  35. @ Joseph Ryan

    It could be worse at least they did not leave it until page 59. At least it was mentioned on page 56 that gives me some cause for optimism. We need to be positive going forward with our only game in town plan.

  36. Latest FT editiorial is quite damning – almost libelous?

    http://www.ft.com/cms/s/0/becf2cfc-2564-11e0-93ae-00144feab49a.html#axzz1BsjFE2Lo

    “These factional antics, as Ireland faces arguably the worst crisis in its history as an independent nation, could turn the expected Fianna Fáil rout at the polls into electoral annihilation.

    That may be richly deserved. This is, after all, the party that through its cronyism and incompetence artificially prolonged the boom of the 1990s into the credit and property bubble of the past decade”

  37. “Latest FT editiorial is quite damning – almost libelous?”

    Nothing libelous there, there is a standard defense of “fair comment”.

    Funny, the FT saying this pulls the rug straight from under the standard establishment play – that those who are annoyed and want the establishment (not just FF ) out, are dangerous anarchist types.

    The Irish have now got “permission” to do something different. I doubt they will really do much with it though.

    What the FT misses is that fueling the boom was an Irish political choice, not just that offered by FF. Every political party and almost everyone in the country was “up for it”.

    viz:

    “This is, after all, the party that through its cronyism and incompetence artificially prolonged the boom of the 1990s into the credit and property bubble of the past decade, and then gave a blanket guarantee to its banker friends that has ended in the humiliation of Ireland becoming a ward of the European Central Bank and the International Monetary Fund.

    Fianna Fáil will almost certainly be replaced by a coalition of the centre-right Fine Gael and centre-left Labour parties. But it will be vacating a lot of political space, some of which will be taken up by populists, including the Republicans of Sinn Féin, now poised for a breakthrough in the south.

    It is thus vitally important that the campaign now opening properly addresses the issues of governance and accountability raised by the crisis. Whether creditors of the banks should share the pain of the bail-out with taxpayers will – and should – be a dominant theme, and the mainstream parties must take ownership of this and not leave the field to the populists.

    This should also be the occasion for the independent voices clamouring for a new politics in Ireland to come forward and lay out their stalls. Irish voters, and the future of the republic, need no less.”

  38. I’ve had enough of this crap.
    I’m pushed now to move ahead of schedule.
    I will bring out my election website and a REAL CONCRETE WORKABLE plan for Ireland’s recovery on wednesday evening.

  39. “Whether creditors of the banks should share the pain of the bail-out with taxpayers will – and should – be a dominant theme, and the mainstream parties must take ownership of this and not leave the field to the populists.”

    It is very hard to argue with that. Especially since Spain is probably going to go under as well. Give the sovereign a fighting chance and refinance the banks at the same time. Trichet won t like it but then he didn t like having the IMF involved in Greece and now it is par for the course.

    The collapse of FF is breathtaking. The management who negotiated the deal are now politically dead.

  40. @Rob S
    FF’s last four leaders have had to resign due to cronyism of varying degrees – from significant cronyism to total cronyism.

  41. @All
    Medium term we need a left right divide. Might even be best if Lab or FG could form government on their own, although national government has attractions given depth of this crisis.

    The document from the DOF should have been the smoking gun. It indicated that Cowen as usual was fibbing. He didn’t act on the best advice available – he acted AGAINST the best advice available, from the DOF many months before the guarantee and from Merrill Lynch. If the civil servants had leaked it in 2009 the country might not have ended up in the gutter. As it was Cowen was driven from office not even by fibbing about his meetings with Anglo but by misreading his coalition partners.

  42. Thanks for that link Oliver,

    “On revising the credit guarantee:

    “A restructuring of the guarantee consistent with the introduction of the Nama initiative should be seen as an integral element of a comprehensive strategy. In summary, the aim should be to enhance the credibility of the guarantee by simultaneously reducing the contingent liability under it and by extending its temporal scope in relation to the sort of long-term bond issuances which are critical to ensuring the covered institutions’ survival.”

    Hmm….

    It does seem telling that in Ireland nobody wants to disrespect the incumbents until they are safely half way out the door. Nice of Peter to keep this quiet for so long.

    Whose next to fess-up / put the record straight?

  43. @Grumpy

    Everything is falling apart and discipline is breaking down. I expect there will be an orgy of revelations and backstabbing when the vultures get to pick over the carcase of FF. Relations between the big hitters are probably toxic. There will be a rush to secure reputations. It will be interesting to hear what everyone really thinks of Lenihan.

  44. Well, we must big it up for the Green Party’s economic success.

    The resignation of the Green ministers will mean a saving on ministerial salaries, so clearly they’ve achieved a Smart Green Economy.

    bjg

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