Economic Letters from Central Bank

Economic Letter – Vol 2012, No. 7
Fiscal Consolidation – Does it deliver? – Laura Weymes

Economic Letter – Vol 2012, No. 6
Housing equity withdrawal in Ireland: 2000 – 2011 – Reamonn Lydon & Niall O’Hanlon

7 replies on “Economic Letters from Central Bank”

No 6 is a bit dull. It could have been extended to include some thoughts on what happened to borrowers post crash, how most of the credit reinvested in property has gone to money heaven, how lifestyles fulled by credit are mostly no longer possible and so on.

Irish Times Editorial

ANALYSIS BY a Central Bank economist of Ireland’s protracted efforts to lower the budget deficit and to contain the national debt makes for sober reading. Fidelma Weymes in her brief paper “Fiscal Consolidation: Does It Deliver?” compares Ireland’s performance against that of the four other countries in European Union and International Monetary Fund (EU-IMF) bailout programmes. By 2014, Ireland’s budget adjustment will – after Greece – be the second largest of those to receive international financial support.

Ireland’s austerity drive, which began in early 2008 will – when measured in spending cuts and tax rises – have reached an estimated 21 per cent of gross domestic product (GDP) by 2015.

Tough austerity measures are a necessary part of the price paid to secure funding support from an EU-IMF programme. And, as the author points out, without that financial lifeline the alternative would have been far worse. The need to close the deficit immediately would have meant far larger spending cuts and much steeper tax rises, with devastating consequences for jobs and living standards. But even with the tough measures already taken, and some more to come, Ireland will, up to 2015, continue to run the largest budget deficit of the five countries in bailout programmes.

It seems that a fiscal tightening of 21% of GDP will have been required to reduce the structual deficit by just 5% of GDP (based on projections that may, or may not be fulfilled).

This will still leave a shortfall in the structural deficit reduction of 3% of GDP.

This implies that any claim Irish policy is a success story should be treated with extreme caution. Further, absent a credible growth strategy, any party claiming that the much-predicted return to the markets implies an end to ‘austerity’ is not being honest with the electorate.


Good stuff there on the banks. Maybe occupy could put up their own ad on RTE about small business owners lying awake at night because the Bank of Ireland refused them a loan for a growing business.


as i note on thread on this above – most bankers know feck all about real economy of smes – all they know about, or think they know about, is property … Ahhhhhhhhh

If anybody had told the Irish Central Bank there was a property bubble –they would have acted immediately;

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