Quarterly National Accounts

The Q2 National Accounts and Balance of Payments updates have been published by the CSO.

The quarterly changes will attract plenty of attention but little can be judged from them given the volatility of the series, the possibility of revisions and the impact of the MNC and IFSC sectors.

Quarterly Changes: GDP +1.5%; GNP +0.6%

More significantly perhaps are the year-on-year changes for the first six months of the year. 

  • Real GDP (2012 prices)
  • H1 2013: €85,163m
  • H1 2014: €90,069m

That is an annual increase of 5.8%.  For GNP the equivalent change is +6.0%. Wow!

Value added increased in all sectors when compared with H1 2013: (% = real annual growth, € = amount in 2012 prices)

  • Agriculture, Forestry and Fisheries: +11.9% to €2.45bn
  • Industry: +0.7% to €22.52bn
    • with Building and Construction: +8.3% to €1.51bn
  • Distribution, Transport, Communications and Software: +10.9% to €20.35bn
  • Public Administration and Defence: +3.7% to €3.22bn
  • Other Services (including implied rent): +3.3% to €33.90bn
  • Taxes on goods/services less subsidies: +9.8% to €8.31bn

For fiscal rules junkies, nominal GDP for H1 2014 is €90.2 billion.  Last April’s Stability Programme Update had a forecast of nominal GDP in 2014 of €168.4 billion.  The methodological revisions completed by the CSO over the summer and the recent growth mean that a nominal GDP of around €180 billion is now likely this year.  Sticking with the Department’s 3.6% nominal growth projection for next year gives a 2015 figure of €186.5 billion.  These increases in the denominator will significantly improve the appearance of fiscal ratios.

Although net exports increased and contributed around 40% of the increase in GDP the remainder is due to domestic demand.  Real total domestic demand in H1 2014 is 4.0% up on the equivalent period in 2013.  Although all components are up (consumption +1.2%, government expenditure +5.2%) much of the increase is driven by investment which is up 11.3% year-on-year.  In recent years much of the volatility in this component has been the result of aircraft purchases by leasing companies based in Ireland.

The current account of the Balance of Payments shows a surplus of 4.3% of GDP for H1 2014 compared to one of 2.5% of GDP for H1 2013.

133 replies on “Quarterly National Accounts”

Am I correct in thinking today’s figures set a new high watermark for Irish GDP? So we have no fully recovered from the recession and are at new highs?

It gives me tremendous pleasure to highlight that JtO correctly forecast this outcome, repeatedly, over the last couple of months. His return to these pages has been long overdue.


one of the few who did. I would also mention Johnny Foreigner in despatches.

No doubt, somebody will turn up in due course to rain on the parade on the basis that i) the growth is spurious ii) it is the wrong type of growth iii) it will never last.

“Although all components are up (consumption +1.2%, government expenditure +5.2%) much of the increase is driven by investment which is up 11.3% year-on-year”
Is that housing?

Not only correctly forecast the outcome better than other forecasters, but correctly forecast the forecasts of other forecasters and correctly forecast the precise moment in time when other forecasters would change their forecasts. A clean sweep, I think. I wish my annual forecast in May that Tyrone would win the All-Ireland had been as accurate.

I posted this here in early August:

“Ireland’s economic resurgence (almost certain to be the fastest-growing economy in the EU in 2014) is being greatly downplayed by Irish politicians and media. I wonder why? Politicians are usually found screaming from the rooftops when economic growth takes off. But, Kenny and Noonan are being extremely quiet about Ireland’s growth in 2014. They are still ludicrously predicting 2.5% growth this year. It will be miles above that.”

“I suggest they have been leaned on by the UK. It is reliably reported that UK Embassies worldwide have been pressing governments to do what they can to prevent a ‘yes’ vote in Scotland. Hence the statements by Barak Obama and Tony Abbott of Australia. Does anyone think that Ireland is not also being leaned on? The last thing the UK wants in the run-up to Sep 18 is world media coverage of Ireland’s economic resurgence. Alistair Quisling is currently touring Scotland telling them on a daily basis that Ireland is an economic disaster area and that the same will happen Scotland if it has the temerity to break from England. He’s telling them that Ireland is bust and still in recession. In fact, Ireland is growing faster than the UK, its borrowing rates are lower than the UK and its budget deficit in 2014 and beyond will be lower than the UK. Even though they can claim credit for these achievements, Kenny and Noonan have been keeping very quiet about them. But, wait until after Sep 18 and Kenny and Noonan will be proclaiming these facts from the rooftops. And I confidently predict that after Sep 18 the official Irish government forecasts for economic growth in 2014 will be revised upwards dramatically.”

Well, well, well. Michael Noonan just announced this morning he’s upgrading his forecast for Ireland’s growth rate in 2014 to 4.5 per cent. Even that is too low I think. Nevertheless, its a huge increase from the 2.0 per cent he was predicting when I wrote the above. Technically, its not ‘after Sep 18’ as I said in above post, but effectively it is because there is a news blackout in Scotland today. So, London won’t mind if they shout it from the rooftops now, and I’m sure they will. I’ll bet these figures get minimal coverage on BBC and other London media today. But, hey, after 10pm tonight, they sure as hell will.

Other spin-off is FG/Lab government almost certain to be re-elected. Allready moving up in polls. No particular pleasure in saying that, but fair’s fair, they probably deserve it.

Enda Kenny should fly to Edinburgh immediately brandishing these figures and telling the Scots they can achieve similar when free. A flight could get him there by 2pm. If he does, he’ll be a hero of free Scotland and probably re-elected Taoiseach for as long as he wants.

The fact that Ireland’s balance-of-payments is in huge surplus after such high growth is a strong indication that (barring some global political, military, economic or natural disaster, which is unlikely, but always possible) the growth will continue at a very high rate for several years at least. In contrast, UK has huge balance-of-payments deficit. Can’t see anything other than Ireland growing at least twice as fast as UK for next few years. What a tragedy for Scotland that the impression of Ireland’s current economic performance they were fed by the traitorous ‘no’ campaign was one taken from the comments in recent years of Morgan Kelly, Column McCarthy, and others, and not the actual one. My pleasure in these figures is tempered by sadness for Scotland, although I hope I am wrong.

It looks very good. Fingers crossed that it continues. It’ll require a good few years of decent growth to get the debt loads down.


“barring some global political, military, economic or natural disaster, which is unlikely, but always possible”

Disasters that are both economic + natural really hurt

“The US economy faces a steeper climb back to positive territory after one of the country’s worst winters on record helped push first-quarter gross domestic product figures down an annualised 3 percentage points more than original estimates.”

What is happening on the earnings side? Are people getting pay rises or is it just broad investment ? What sort of investment ? How sustainable does it look ?

If you are in full on doom porn mode it is all unsustainable or a statistical chimera. If you are more honest, it is impossible to say . Re pay it is a mixed bag- some up/some down.
The govt has been scrupulously silent on Scotland or at least FG has. I would be sceptical as to whether a one party sectarian state is good for Scotland. It worked well in your patch. Mention the Pope in certain SNP circles and stand back.

I don’t see how aircraft purchases can affect GDP either way. These will go in as a plus item in investment, but as a negative item in imports. So, while these individual components of GDP might be affected in a volatile way, overall GDP won’t, as they cancel each other out. If the pilot delivering the plane from Seattle purchases a cup of tea and a sandwich at Shannon, before flying back to Seattle, this will go in GDP, but that’s the height of it.


SNP are anti-sectarian. Some sectarianism in Scotland, but its nearly all from ‘no’ side. Rangers supporters and Orange Order. All staunch ‘no’. Orange Order had anti-independence march in Edinburgh last Saturday. Your Celtic supporter friend (that you mentioned on other thread) should have joined it if he’s so pro-Union. Vast majority of Celtic and Hibs supporters are pro-‘yes’. Working-class Catholic Glasgow will vote ‘yes’ for certain. Next time he’s at Celtic-Rangers match, he shouldn’t complain if Rangers supporters wave Union Jack in his face. After all, its flag he voted for (assuming he didn’t change at last minute). Actually, he should consider transferring his support to Rangers, More appropriate if he’s a ‘no’ voter.

FG/Lab government didn’t have to intervene. All they needed to do was do what politicians usually do, and highlight their achievement in bringing about resurging growth in Ireland. The news would have trickled to Scotland weeks ago. But, they kept mum, until this morning when its too late. I notice BBC still hasn’t reported Ireland’s growth figures. Surprise, surprise.

@ JtO,

The point about aircraft purchases was in relation to Domestic Demand not GDP and it to note that there is no consistent trend in the series, even when seasonally adjusted.

SA real GFCF (in 2012 prices) for the past four quarters has been:
Q3 2013: €6.7bn
Q4 2013: €7.0bn
Q1 2014: €6.7bn
Q2 2014: €7.2bn

my Celtic pal would probably wave the tricolour at a push. But he is Scottish unlike you and he has a long memory. SNP is ambivalent at best on issues of Sectarianism. you should know that given you are a student of history. Look up Billy Wolfe. It is true that Salmond has courted the Catholic Church in particular Cardinal Keith O’Brien-less said about that the better.

JTO- timeo danaos et dona ferentes!!!!

I told you so(how is that for mature). Me > all the academic economists (bar the great Seamus). When will they ever learn?

Also, I’m not a nationalist, but am fingers crossed for a yes vote in the Indyref. Might not make much economic sense but there has been something godawful about the sight of the British establishment in full ‘bow down ye ungrateful plebs’ mode. You expect it from the Tories (and the Union is intellectually coherent for them) but seeing Milliband, Clegg, Galloway and all the other Westminster show-offs trying to bully the serfs has been sickening. If it’s a no vote there will be incredible bitterness about the way Labour in particular has acted. Both the British and Irish Labour parties are completely detached from the lives of ordinary people at this stage.

After two monumental economic busts in a generation it’s a little early for crowing and the old habit of drowning out dissent should be kept in check.

Michael Noonan says: “The turnaround that we are seeing in the Irish economy is a direct consequence of the policies pursued by this Government and the sacrifices made by the Irish people. Consolidation of close to 20% of GDP has been introduced along with major structural reforms designed to boost the competitiveness of the Irish economy. The specific measures introduced over the past three years to repair and grow key sectors of our Economy have also made a significant contribution.”

That is self-praise whether valid or not.

When I suggested that annual job creation in 2013 was more likely 30,000 than 61,000, I wasn’t guilty of that serious sin of “talking down the economy” (end June 2014, the number of jobs added in 12 months was 31,000).

So it should be possible to acknowledge a recovery while pointing to some caveats.

1. The smallest quarterly rise compared with the same period last year was in personal consumption at 1.8% compared with public spending at 7.9% and gross capital formation at 18.5%

2. The GNP is boosted by tax inversion companies and by the year end these firms will have a payroll of 600,000. Changes in undistributed earnings impact GNP and the Balance of Payments (BoP).

3. Goods exports value for BoP purposes are €7bn higher in H1 2014 compared with the ‘external trade’ release, less of an adjustment for imports giving + net exports in Q2 – I assume this is related to the new European accounts standard.

4. Per euro of exports, indigenous firms have much greater economic impact.
5. Chemicals + medical devices account for 60% of goods exports and in capital intensive sectors, export value is four times material imports. Being capital intensive, payroll has been in the low 40,000s for a decade.

6. So it’s foolish to view a Balance of Payments surplus as cash that is in local Irish banks. The trade surplus fell by €1.54bn in July which is temporary.

7. Aviation leasing in Ireland employs less than 1,000 people but the companies own over 3,000 commercial aircraft that were valued by the Department of Transport in 2011 at €83bn – almost half the value of annual GDP.

Add in over 300 aircraft in Ryanair’s fleet.

Purchases and sales do create volatility in the data.

8. By the end of the decade, the various distortions in the national accounts will likely disappear because of global tax reforms but even in the US since 1999 GDP per capita is not a good indicator of the standard of living of most people there.

9. Absent a big jump in personal incomes including adding what would be viewed as ‘real jobs’ (income and security that would get a mortgage and have some surplus to spend ) amounting to a net 250,000 to return to an unemployment rate of 5 to 6%, there will not be guaranteed high growth.

Mortgage approvals in April-June were at the lowest since 1974.

10. There has been a delayed recovery in many places but the usual pattern is to experience a spurt in growth when it does happen.

11. The Government’s annual target for FDI exporting jobs is 7,000 to 2020.

Further detail here on understanding Irish economic indicators:



keep spinning that wonderful home spun doom porn.

Re pint 7: Aircraft valued at 83bn or 50% of GDP. the diffenence between stocls and flows is part of first year economics.

@ tullmcadoo

Thanks for that tip.

A coward like you always has the advantage because I cannot know what’s your interest and so on.

I was used of your type during the bubble but most had the cojones to identify themselves.

Having got a master in economics degree, I don’t need any help from you.

I should have allowed for pig-ignorant folk and referred to the average turnover of commercial aircraft in developed countries in particular.

The point here was in respect of the very high capital value per employee and I used verifiable official data but I didn’t have an annual breakdown.

Hey Tull

Have you got any doom port left over from last Christmas ?
In fairness, things could go either way. Authers said a while ago that the policymaker-market tango is quite delicate and needs to be managed well as misunderstandings can be very costly.


I would have agreed with you in the mddle part of the first decade of the century.. I do not feel the need to make myself known as I am not into self promotion.
You shoudl not assume that anybody who disagrees with you is thick. I have the same degree as you but see things from a different perspective.

how many to you want? Authers is quite right but at least policy makers are aware of the risks now. The uber fiscal and monetary conservatives are in Colditz.

“Mortgage approvals in April-June were at the lowest since 1974.”

@Michael Hennigan I do not see why this is a negative factor. There is growth in the economy, this is obviously not being driven by excessive mortgage lending. THis is a good thing, as even a movement towards normal mortgage lending can sustain the growth without creating dangerous personal debt.


Congratulations and what a conspiracy! I love it 😉

Could the downplaying not be good domestic politics too.

1. The better things are the more people expect. Better to keep the good news quiet until the cat really is out of the bag. It makes the budget much harder if people think the pressure is off.

2. Also, I remember Kruggie observing that the link between re-electing incumbents and the economy was not necessarily how well the economy was doing, but simply that the trend was upwards in the 3 quarters prior to the election. (this is for America and presidents). So “postponing” the recovery until we approach the election keeps the good news fresh in the minds of the voters.

Also, I think it’ll be a real trick for the government – and Noonan was at pains to do this today – to acknowledge that good numbers mean nothing to the thousands unemployed, emigrated or earning a lot less than they did 7 years ago. They can’t crow about a % of GDP – that means nothing to people worrying about Christmas….

@ tull

Don’t you be ‘grigging’ Michael H, as my late father used to say, and bringing out his bad side 🙂

Talking about ‘doom porn’ distracts Michael from his project, which is serious and deserves some respect IMHO.

What matter if he is in Kuala Lumpur or on Mars. Einstein wrote his theory of relativity while working in a customs office.

Our colleague provides a valuable public service, just like this board and its moderators.

Ni neart go cur le cheile.

You are right to point out that it is too early for crowing, and indeed no time for crowing at all. The success was achieved largely on the backs of less well off working in industry who have seen little of the gains.

The ship has been steadied for the benefit of those on the upper decks, and thats where the loudest crowibg is coming from.
On a positive note, I can say that the revival that started in Dublin as a commercial investment splurge (following purchase of buildings at fire-sale prices), has spread out a little particularly since about last March. Some indigenous exporters are doing well into the UK market, where the strenghening of stg has been a major benefit.

@Dearg Doom
You surely cannot be serious. Why in a growing economy should banks not be giving mortgages at normal 2014 levels versus 1974 levels. Why is bank capital tied up in loss making BTL investments, depriving younger people of mortgages?
Somebody has clearly decided to protect certain failed property investors and landlords by manipulating supply and forcing rents up. Imho, NAMA in cahoots with the banks and DOF have done a real number on this, jointly. Even the minister who says he does not want a boom bust economy, wants house prices to rise another little bit!
Could it be so simple that most of the decision makers, and their advisers, are heavily invested in property?

@Sarah Carey

What you say is possible. But, its attributing a level of intelligence and political acumen to Irish politicians that has never been in evidence before in any party. When has any Irish government ever held back from proclaiming good news as part of some clever scheme to manage public expectations? My explanation is much more likely. Cameron told them ‘STFU about your economic boom until I’ve finished off Scotland. Well, looks like he’s done it, so the leash is off, and Kenny and Noonan are now free to boast as much as they like about their boom. And, fair play to them, they can take credit for it and will probably be re-elected on the back of it. Tragic night for poor Scotland, though, riddled with traitors as much as Ireland ever was, and which will now have to endure another couple of decades of subjugation by England. Few upsides tonight, but one of them is that at least we won’t have to listen any more to John ‘Unionist’ Bruton insulting the men of 1916. Let’s be brutally frank and politically incorrect about it. Their’s were the only methods that ever worked and, if it wasn’t for them, its Ireland that Cameron would be gloating at tonight.

All we need is jobs, less stagnation in wages and some proper residential property, preferably of the reasonably priced, high density, family friendly kind. In other words, until I see the Celtic Phoenix I won’t believe. My takeaway from the last decade is that when it comes to medium term forecasting, no one really has a clue.

My point about mortgages is not that what is happening is right. My point is that with mortgage lending well below stable levels there is scope for this to be increased to the benefit of the economy.


Am I correct in thinking today’s figures set a new high watermark for Irish GDP?

I think its still a couple per cent short. But, one interesting thing is that this years’s growth could put Ireland’s GNI per capita about 12 per cent higher than UK. GDP per capita is much higher still in Ireland, but GNI is the one used most for comparison. Need to qualify that by saying UK still has to revise its GDP figures to meet new EU rules. Ireland did it in June. Economists estimate these revisions might add 3 per cent to UK GDP. Could be more, could be less. However, given Ireland’s much better balance-of-payments situation, the high probability is that Irish economy will grow much more rapidly than UK in next few years, just like it has done since early 1960s. In which case, we could easily see Ireland’s GNI per capita 25 per cent higher than UK within 5 years.


Fine sentiments! But you know this bourgeois blueshirt would have voted no out of fear 😉

Now – these GDP figures. These are the new figures that take account of prostitution and crime, right? What I’d love to know is how they estimated them..

@Sarah Carey

May I make a suggestion? Invite Morgan Kelly on your program and (a) ask him for an explanation as to why his forecasts have proved so hopelessly totally wrong and (b) will he apologise for the damage he did to Ireland’s economic reputation will his wild apocalyptic and now-proven-wrong forecasts?

Scotland looks like a ‘no” and per RTE “The British pound surged to a more than two-year high against the euro”. Just shows the markets can’t price this sort of thing.

Which says a lot about future asset price volatility as the economic situation continues to destabilise political arrangements. I think this vote was partly a consequence of how the UK managed the post Lehman moment.

And Cameron is too much of a PR wonk to be a decent leader. He badly misjudged by not having devo max on the polling slip.


“Lord Lester, a Liberal Democrat peer and barrister who was special adviser on constitutional reform to Gordon Brown when he was prime minister, said: “It was Cameron’s failure to allow that second question [on the ballot] – and Labour’s to press for it – that has led to this situation. There is only one question and it is not the right question – and it is an extremely dangerous question. If answered Yes, it is going to lead to the weakening of Scotland and the UK.”

And he threw all his toys out of the pram over Juncker, to no effect.

There is someshing tawdry in a blog run by an economics professor indulging a anonymous commentator in an ongoing campaign against another economics professor, isn’t there?

‘A damned close run thing’, but great for democracy.

The next question is do losers matter, even when 46% are losers.

JtO you are of course correct. The only way to achieve a result which is rejected by the ballot box is by the bomb and bullet.

@ BW2

“The only way to achieve a result which is rejected by the ballot box is by the bomb and bullet.”

What about sanctions ? Or lobbyists ?

@Sam Maguire

That’s your longest comment ever on this site. Well done. Alas, its not original, but taken verbatim from a well-known professor’s tweet.

The outcome was no real surprise except in its decisiveness. It is to be hoped that Cameron and the Conservatives will learn the international as well as the national lesson that it brings; it is contradictory to be against disunity in the UK and to be almost actively promoting it at an EU level. Putting perceived party political interest above almost all other considerations is a disaster-prone approach to politics.

The last thing that Europe needs is a return to a domination by – often jingoistic – nationalist sentiment.


When was the decision to join the United Kingdom ever put to the people of Ireland, Scotland or Wales? Military conquest was the preferred method. Seeing the leaders of Scotland now having to grovel for a few crumbs from their Eton-educated rulers in London is pathetic. Thank God for Patrick Pearse and James Connolly. At least they enabled Ireland to avoid such a humiliation. I see in today’s IT that Bruton now wants a statute erected to John Redmond. You couldn’t make it up. The Scots might as well erect a statute to Sir Alistair Quisling.


Are you suggesting that Morgan Kelly would lie?

Anyway, since he never condescends to have his forecasts questioned by the media, I’ve emailed him asking for an explanation as to why his apocalyptic forecasts have turned out so hopelessly wrong and to apologise for the damage they caused. If he does, then, as a Christian, I think he should be forgiven. But, not until then. We will see if he replies.

Listening to the national broadcaster, and some of the more outlandish conclusions being drawn as to the possible consequences for Ireland, one fundamental point may be being overlooked; the government of the UK remains the one that is bound by EU membership and the obligations that this brings with it.

That relationship is not changed one iota, including, for example, on issues such as taxation and the ban against acting in a discriminatory manner as between firms at a national i.e. UK (including Northern Ireland) level.

Battle of the Giants:

Morgan Kelly – 09 March 2014:

“Ireland is facing disaster. We could be facing something really, really terrible, quite soon.”

David McWilliams – 03 September 2014:

“Something is stirring in the Irish economy. The place looks like its about to take off.”

Ireland’s CSO 18 September 2014:

GDP up 7.7 per cent y-o-y – GNP up 9.0 per cent y-o-y.

OK, which one of the giants got it right, and which is now a laughing-stock?

MK was one of the good guys. He made his call and was proven right on the bust but wrong on the rebound probably because he failed to fully account for the impact of the necessary policy easing. However, for a long period of time post 2007 he looked like he could be right due to the ineptitude in the conduct of policy makers in the EU- and for once I am being extremely charitable here. If we had continued on the course set out by Weber, Stark,, Weideman etc, there would now be no EU and we would have defaulted.

By all means direct you ire at the economics profession. But direct it at those that are still campaigning for default, forecasting doom and refusing to recognise that things have changed.

@The English

Go on; now is the time for a referendum on English Independence. You know you want it …

@John TheOptimist

Scotland loses a battle with England; the neighbourly war goes on.

@ Dearg Doom

Mortgage approvals will of course rise as the recovery proceeds.

However, it will remain difficult with flat pay and insecurity for some people to get a mortgage given the risk averse culture now in the banks.

The IMF said in its report on Italy on Thursday that 70% of new employment contracts are temporary – this trend based on the experience in Japan and South Korea is bad long-term for an economy.


You’re in danger of making the same mistake as Bank of Ireland did in 2006 and 2007 when Japan and Ireland were called the world’s wealthiest economies.

GNI per capita would not be the most useful measure of Ireland’s standard of living.

Actual individual consumption (also called Household actual final consumption) using the purchasing power standards is viewed as a better measure and Ireland ranks with Italy.

It is the sum of the total value of household final consumption expenditure, non-profit institutions serving households (NPISHs) final consumption expenditure and government expenditure on individual consumption goods and services.

Rossa White in 2010 when at Davy produced an interesting note on Ireland’s Celtic Tiger era capital stocks:


He said:

“GNP per capita is an income measure, but measures of wealth are more difficult to grasp. Probably the best way to compare the wealth of countries is to look at the capital stock. Years of high income c an be turned into physical wealth if invested properly. Let’s take three small nations as an example: Belgium , Finland and Ireland. The three are closely matched in the euro – area income per capita table , albeit that Ireland slipped behind in 2009. But no Irish resident who has visited Belgium or Finland would have the audacity to claim that this country is wealthier. Transport infrastructure is vastly superior in those countries, as is the telecommunications network, and public services are delivered from higher – spec schools and hospitals.”

You may disagree but this is using data by looking behind it.

In 2012 Conall Mac Coille, his successor as chief economist, produced a report which showed that only around one-third of pharmaceutical export revenues count towards GDP.

@JtO right to point out how MK has been proved totally wrong in such a short space time. Totally wrong to hail DMcW a hero for something he said 2 weeks ago. DMcW was the main culprit in the doomsday solutions – leave the euro, default, forgive all mortgages etc.

@ MH

“In 2012 Conall Mac Coille, his successor as chief economist, produced a report which showed that only around one-third of pharmaceutical export revenues count towards GDP.”

What does that mean? GDP = C + I + G + (X – M). Is there something left out of X? Why don’t they all count?

For the pharmaceutical sector the output approach to GDP in 2010 gave

Output: €36,828m
Intermediate Consumption: €23,990m
Value Added: €12,838m

Most of the output is exported (adds to GDP); a chunk of the intermediate consumption in the form of raw materials and patents is imported (subtracts from GDP). Value added in the sector is around one-third of output. Why is this a significant point?

Some of the value added stays (in the form of wages) and most of it leaves (as repatriated profits).


Why should Ireland worry about the UK leaving the EU? You seem terrified of it.

It might be bad for the UK. But, it would be fantastic for Ireland. There’d be a flood of companies moving from the UK to Ireland. No American multi-national wishing to invest in Europe would dream of choosing the UK over Ireland if the UK wasn’t in the EU. And Ireland’s trade to the UK wouldn’t be affected in the least, as we are now in world of global free trade.

If there is a UK referendum on leaving the EU, as seems likely, I will certainly vote ‘yes’, not because I think it would be good for the UK, but because I think it would be good for Ireland. My hope now is that the Tories and UKIP can form a coalition government in the UK after the next election and for several elections after that., with ideally Boris Johnstone as PM. One reason being that such a government might take the UK out of the EU in a blaze of anti-European, Union-Jack waving, Last-Night-of-the-Proms-type, frog-and-kraut bashing rhetoric. Just see the flood of companies moving to Ireland if that happens. The other reason being satisfaction, after their treachery in Scotland, at seeing the UK Labour Party in the wilderness for a generation.

@Brian Woods 2

As you probably know, I was always hostile to David McWilliams on here. Many posts back in 2009-2011 to prove it. Actually I was a lot more hostile to David McWilliams back then than I was to Morgan Kelly. So, I agree with what you say about the David McWilliams of a few years ago.

However, in my philosophy I believe in forgiveness when the person changes (that’s why I voted for GFA and was very sad last week when Paisley died and actually came to admire him a bit, whereas in autumn 1968 when he was yelling anti-nationalist abuse at us outside Queens University Students Union, that would certainly not have been the case).

David has gone up in my estimation in recent months for two reasons: (a) he admitted that his earlier pessimism was wrong and he came to conclusion economy was resurging (b) he actively supported a free Scotland. So, I forgave him instantly for his past sins. Same would apply to Morgan Kelly.

@ Tull

Do you think we can say that the structural problems in the global economy have been satisfactorily addressed and that risk is well priced ?

“On the other hand, the big lesson the politicians have learned from this crisis is that no one in the financial system understood either the extent of the vast risks that were being accumulated or where those risks lay”

“Christopher Cox, chairman of the Securities and Exchange Commission, defended himself, saying that virtually no one had foreseen the meltdown of the mortgage market, or the inadequacy of banking capital standards in preventing the collapse of institutions such as Bear Stearns. ”

I can’t see John the Green jersey hanging around if things go wrong again. He didn’t stay around the last time.


Where did you get the idea that I was worried about the UK leaving the EU? I think the chance of that happening is, and remains, as slim as Scotland voting for independence (an outcome which I predicted; not that this required any great prescience).

Your view of the advantages of independence is, to my mind, more than a little bit skewed. Sovereignty has become a relative term in the modern global integrated economy. Ireland, the vast bulk of whose manufacturing exports are produced by footloose foreign multinationals – mostly American – and whose agricultural exports, and the income from them, are dependent on a common agricultural policy decided in Brussels, has very little to crow about, other than the stoicism with which those that carried the burden of adjustment, including those no longer working in Ireland, turned the situation around.

I am not yet certain that those who carried very little of it will – yet again – get away with. But they probably will.


This is an extraordinary way to run a country! The Dáil is the body responsible for raising revenue and seeing that it is correctly spent. If sovereignty Irish style allows this kind of conduct to continue, it also has not much to crow about.

@Michael Hennigan.

I take some of the points you are making. But, I totally disagree that consumption is a better measure than GNI. It doesn’t take account of saving. If one person has income of £1,000 and spends £500, he’s no richer than person who has income of £1,000 and spends £1,500. Ireland stopped spending during recession, particularly on houses and cars, but that didn’t mean its GNI went down as much. The gap was reflected in balance-of-payments surplus. Both are now recovering strongly. No point in reinventing the wheel at this stage. GDP and GNI have always been used as measures of country’s wealth.

With regard to capital stock, I agree about the difference between that and income (as measured by GDP/GNI). I agree that length of time country has been wealthy (using GDP/GNI) is a factor. Most countries in north-west Europe were wealthier than Ireland up to 2000, then Ireland overtook them, but the fact that they were wealthier than Ireland for a long time before would affect the capital stock. But, the more years that go by with Ireland wealthier than them the more the capital stock goes up and gap closes.

With regard to infrastructure and services, no evidence that these are uniformly better in other EU countries of similar GNI. Have been to Belgium and Finland many times. Its a mixed picture. Depends which ones you are talking about. Public transport there better than Ireland, But, motorway network in Ireland probably now level with Belgium (given their respective sizes) and certainly better than Finland (reflected in lower road deaths rate in Ireland). Housing definitely better in Ireland (if sceptical, check EU stats on such things as size, leaking roofs, dampness, darkness etc and this will be confirmed). Education very good in Finland. Came 1st in EU in PISA tests. But, Ireland comes 3rd or 4th, and ahead of Belgium. Life expectancy higher in Ireland than Finland and mortality rates lower, so no evidence their health service there is better. Sports stadia much better in Ireland. Dublin airport terminal at least as good. The main measure used to combine all these things is UN Human Development Index. Ireland ranked above Finland and Belgium in this. Most of those who keep saying that infrastructure and services are uniformly better in other countries have never been there. Far off hills.

There was a very interesting discussion at FT Alphaville last December about what is going on at the macro level .



Credit is the transfer of capital from low performing uses to higher performing uses. The housing crisis was a period of extreme breakdown in that function. The market and the individual decision makers were incorrect in their allocations of capital. While not all debt is bad, debt created by credit that was used to increasingly pursue diminishing returns is bad, and that is what both consumers and industry did during the housing bubble. The values of these future-funded current account obligations were questionable then and negative now. We are still pulling capital out of our current and future economy to service the debt of past cheeseburgers, vacations, and over-inflated home prices of the past. How is this NOT deflationary if this capital is not then reinvested into the economy?

We can expect that capital, in the form of structured debt will be continue to be pulled from consumers to repay lenders who now have very limited options for re-investment. The breakdown is not that investors are happily sitting on safe government protected assets- flowing into the equities markets where corporations are buying back their stock, the breakdown is that corporations who are the beneficiaries of this capital flow, lack demand. It seems fairly inane to assume that the irrationality of markets, that precipitated this crisis, will now become rational and efficient to solve the crisis.”


You simply don’t get nationalism or what it means for a country to be free. Its not about some perfectly-sensible agreement between nations to obey certain budgetary restraints and then having their freedom of movement restricted in order to keep to them. All that is perfectly normal. A nation’s independence is more than about its economy. Its about its identity, culture, freedom and its standing in the world. Dublin 4 economists and politicians don’t understand that. Gobsh*tes like Conor Cruise O’Brien certainly never did. Scotland is a nation as much as Ireland, but this morning its a cowed broken beaten dispirited depressed nation, ruled by its conqueror England for another decade or two at least, and with a native Labour-dominated lickspittle political class of sycophants, knaves and traitors (ironically some with Irish names like John McTernan and John Murphy), whose political ideology is based on the principle that the Scots are too stupid to run their own affairs and need Mother England to do it for them. Alex Salmond made a great and heroic effort to try and break the mould, but he just failed. Ireland had a similar class once, but the men of 1916 succeeded where Alex Salmond failed and got rid of them in one fell swoop. They’ve never dominated in Ireland since (hence their perennial hatred of Fianna Fail. the main (but not the only) political successors of those who got rid of them in 1916, although unfortunately they still hang around in their Dublin 4 redoubt, bowing twice-daily in the direction of London, popping up regularly in sites like this, and hoping one day for a comeback. They had high hopes that the 2007-2011 global recession would pave the way for their comeback. That’s why they milked it so much and inundated the country wild false apocalyptic claims about ‘Ireland being destroyed, ‘Ireland being bust’, ‘Ireland finished’, and so on. They hoped it would all lead to rejection of the 1916 project and a return to the embrace of Mother England. Now that its unravelling and Ireland is back at the top of the global league table for economic growth, they are so so so angry, as any reading of this site would show..

So, even if it brought no economic benefit, I’d still want Ireland to be independent. As it happens, however, it does bring economic benefits. Lots of them. Ireland has progressed far more as a free and independent nation than the other Celtic countries that remain in the UK. In 1922 Belfast and surrounding area was miles ahead of Dublin in population growth, wealth and economic innovation. Now its a backwater. In 1922 Scotland and Wales were much richer than Ireland, were far more industrialised and had had a century of population growth while Ireland’s fell. Now free Ireland is way ahead of them in every area. That’s what comes from being free and having sovereignty over your own affairs. The fact that a small proportion of that sovereignty is freely sacrificed for things like the Stability Pact is neither here nor there.

Ireland and Scotland are both making the world news headlines this morning. Ireland because its the fastest-growing economy in the developed world. Scotland because it didn’t taken the chance to regain its freedom and preferred to be ruled by its conqueror. This morning, Ireland is euphoric and full of hope after yesterday’s growth figures. Scotland is broken and depressed, seeing no hope for the future. You don’t need to be a genius to see which of them is going to forge ahead more in coming years. That’s the difference between a free nation and a conquered nation. But, Teachfaidh ar La for Scotland. They will lick their wounds, regroup and fight another day.

Urban / suburban ‘free’ Ireland, degradation of indigenous language and culture ongoing, looks like a quasi-England to me.

According to Eurostat (2013), Irish GDP per capita 119% of the UK figure; Irish AIC per capita 86% relative to the UK.

I wonder which tells you more about how the ordinary person is doing.

@John Corcoran

“The Scottish serfs voted for their landlords, a noble Scottish tradition.”

I don’t think that’s fair. Wasn’t it the poorer districts in Glasgow who voted Yes and the toffs who voted No?


Have you your space reserved in the Republican plot in Glasnevin? 😉

@Sarah Carey

NO! Whatever the location of my death, I shall be buried in Tir Eoghain.

By time I die (hopefully a long way off), I doubt there will be a Republican plot in Glasnevin if Bruton and Norris have their way.

Worth looking at Lord Ashcrofts polling on his website. The SNP did well in Labour heartlands (Glasgow) but did relatively badly in their strongholds.
That suggests that Salmon may have over-cooked the move left to capture Labour votes with promises ofmore Welfare State. In so doing, he may have lost the disillusioned middle class Scottish Tories who have migrated to the SNP in droves in recent years.
Politics is the same everywhere. As the American’s say “you gotta dance with the girl you brung to the Prom” Salmond’s eye seems to have wandered.

@JtO I’m afraid DMcW is still fully capable of publicity seeking arrant nonsense, knowing it to be so. Last week he wrote an open letter to Mario urging him not only to print money but to hand it out directly and indiscriminately to the punters as interest free loans. At least MK is sincere.
As to Paisley I could never respect a man whom Martin McGuinness describes as a friend. But let’s not go there – serious Godwin territory.


I missed that about DMcW. I was totally preoccupied with Scotland’s referendum this past few weeks and didn’t see any other news. If what you say is accurate, I agree with you that it was a daft suggestion. If MK is so sincere, why doesn’t he now withdraw his absurd forecasts and apologise for the damage caused? Then he can be forgiven. Been googling and I see he’s now a member of something called the Royal Irish Academy. Is it the Queen who appoints people to that organisation? The only reason any organisation would call itself ‘Royal’ in Ireland is that they are hoping the ‘Republic’ is temporary. I think that gives a clue as to the motivation of his forecasts.


While class was a factor, age was a bigger factor. Some 54 per cent of those aged under 65 voted ‘yes’. The older generation that grew up during and just after World War 2 have been indoctrinated into believing they are British and not Scottish. Meet the type all the time in Northern Ireland. But younger Scots feel different and will one day liberate their country.

If MK is so sincere, why doesn’t he now withdraw his absurd forecasts and apologise for the damage caused?

Go on then JTO. It’s so easy.

Forecast Irish GDP for September 2019


Germany is mostly on that flat European plain so it’s not eternal like the island of GB. The border with Poland tends to move fairly often and it’s easy enough to fix it on the wrong river.


Not sure where you’re visiting in Finland. I frequent it regularly and lived there for a while. My experience is that it beats Ireland on public transport, child care, schools, public space, apartment living, tenant rights, civic engagement/pride, policing and urban planning.

Not that Ireland is practically bad at these things, just not (in my experience) better than Finland. We do of course have many geographic/climate/cultural/demographic advantages over her, which, either we haven’t leveraged enough (yet) to be better at these things or we don’t value these things as much. We are also way better at attracting FDI, tourism, hospitality (hotels are better here) and small chat, though they’re better at directness, and with age I find the latter somewhat refreshing, you know where you stand. I digress.

You mentioned housing. I have to say that any apartment I’ve visited there (Helsinki/Kuopio areas) is of twice the standard of anything here. I have seen ZERO that are built without young families in mind. Perhaps they’re there, but I’ve never came across them. While in Ireland raring a child in an apartment is seen as a form of child abuse and probably for good reason.

Perhaps we do have a better housing stock than the Finns (on average) but I suspect that it’s cos we built a lot of high quality 3/4/5 bed semis in the middle of nowhere during the credit boom. I’d suggest we wouldn’t beat them on a ‘quality accommodation where people want to live’ index.

“The border with Poland tends to move fairly often and it’s easy enough to fix it on the wrong river.”
It seems to flop over westwards about every 100 years…. I predict by 2200 it will be in France

@JtO You have probably wondered why DMcW’s “print and give” proposal bothered with the technicality of interest free loans. As D explains his proposal had the potential to become inflationary but then Mario could simply ask folk to pay him back – ingenious what? The amazing thing is he gets away with this stuff, any other profession would have defrocked him or sumfin but it seems in economics any chancer can spoof anything.

@That’s Legal

I have been 6 or 7 times, mainly Helsinki, usually 1-day or 2-day business trips.

In general, however, I poo-poo the idea of comparing countries by personal experience when visiting them. A personal visit can tell little about a country’s education or health system (unless one has a heart attack while visiting, which fortunately has never been the case). I laugh at the number of people (not you) posting on Irish blog sites who claim to have first-hand experience of other countries’ health systems after holidaying there. Similarily with crime and policing. One’s view would tend to depend on whether or not one got mugged during visit, which would be a bit random.

I prefer to use statistics from Eurostat and other sources. There’s masses of them available on internet now. I’m not saying Ireland is better than Finland. I’m dismissing the idea that the two countries’ GNI figures don’t give an accurate picture of their respective economic and social development, which was the original point MH made. I say they do. The latest figures for 2013 show Ireland and Finland have roughly similar GNI ( although after Thursday’s figures, Ireland likely to move ahead in 2014). So, I’d say that, if you went through all items one-by-one, the two countries would come out pretty close, with Finland better in some., Ireland in others. This is what the stats tell me.

EDUCATION: Stats say Finland better than Ireland, but Ireland good too. Finland ranks top in Europe in most education stats. Ireland 4th/5th. BTW, its a Finnish thing, not a Scandanavian thing. Sweden, Denmark, Norway rank way behind Ireland in most education stats.

URBAN PLANNING: Stats says Finland better. All Scandanavian countries seem to excel at that. Ireland has similar attitudes to US/UK in regard to this.

CHILDCARE: Judged by the normal yardstick of modern ‘progressive’ opinion, stats say Finland much much better. Ireland probably ‘worst’ in Europe by this yardstick. But, this is subjective and too large a subject to do justice here. It depends on one’s point of view. If one thinks its best for young children to be raised in state-owned child processing units, Ireland is way behind Europe and Finland way ahead. If one thinks its better for young children to be raised by their mother, Ireland fares better. Not really suitable for in-depth debate here, but I’m very glad I was raised by my mother as an infant and not in the local ‘Che Guevara Childcare Centre’, which tends to be the case in more ‘progressive’ countries.

HEALTH: Stats show them pretty close. Life expectancy in Ireland now slightly higher than Finland. Used to be lower. Finland’s suicide rate much higher.

CRIME: Stats say Ireland better. Finland has very high crime rate and highest murder rate in western Europe.

PUBLIC TRANSPORT: Definitely Finland better, as are all Scandanavian countries. Its a speciality of their’s.

PRIVATE TRANSPORT. Ireland has better motorway network now and its road deaths rate is lower.

COST-OF-LIVING: Definitely lower in Ireland now.

ECONOMIC GROWTH. Ireland better. It ranks higher in most surveys nike Forbes, its average growth rate over past 50 years is higher. Its growth rate in 2014 so far is 6%, Finland 1%.

Sorry, something happened my laptop and I sent post too soon.

HOUSING: Masses of stats in Eurostat database say Ireland better, mainly because iis much more modern, although Finland good too. Average house size higher in Ireland. Both way ahead of UK, for instance. But, I agree there is an element of subjectivity here. Finns, like most Scandanavian and northern European countries (except Ireland and UK) go for high-density apartment blocks in cities. These are usually very well-designed. No doubt about that. Irish prefer houses, often on outskirts of towns, often detached, frequently with large gardens. No way of reconciling different points of view on this. Environmentalists like Frank McDonald hate the sort of housing Ireland has. But, for my own personal choice, its Ireland all the way, as I prefer to live in a modest detached house, on the outskirts of a small village in Tyrone, with a large garden where I can practise my putting and picnic in summer, and with the river and mountains nearby, rather than live in a 4th-storey apartment in the middle of some city, no matter how well its all planned. But, I agree other people may prefer differently.

So, overall I’d say Ireland and Finland are close, just as the GNI figures indicate.

@Brian Woods 2

I agree totally with you about daftness of some of DMcW individual proposals. Was just making point that he’s now come round to realising Irish economy is doing well and not some disaster area and has publicly admitted that his previous assessment was wrong and far too pessimistic (‘in denial about growth’ was phrase he used himself about his previous opinion). MK has not done that yet and is silent in face of growth figures showing he was totally wrong. Why doesn’t Ireland’s Paper of Record Lies interview him about the latest growth figures or give him a platform to comment on them? After all, they gave him plenty of platforms to savage the Irish economy back in 2009-2011? They had an agenda, of course, as they’ve always had, and MK’s apocalyptic forecasts fitted in with their agenda perfectly. Plus, DMcW’s support for a free Scotland covers a multitude of sins in my book.

John the Outrageous
Why dont you ring up Morgan Kelly ( here is his contact details : http://www.ucd.ie/economics/staff/profmorgankelly/) and talk to him. Of course, that would require courage, which an anonymous troll on a website is by definition lacking.
Email me and I will mediate your call 🙂
Your paranoia is disturbing, frankly . And hilarious

JTO must be the economics equivalent of Ross O Carroll Kelly. Absolutely hilarious, whoever is behind it.

@That’s Legal

I valued your comment about layout of blog on the other thread. It was all a rush to get it out before Scotland referendum. Literally worked all night last weekend. So, no time to design it properly. Will give it complete revamp next week. As you seem to know much more than me about such things, any suggestions welcome.

@Sam Maguire

I emailed him on Thursday night. No reply yet. Can’t say I blame him. I mean, the journalist who forecast Dublin would beat Donegal by 14 points has been keeping quite a low profile this past fortnight as well.


When you make an accurate forecast, then you can talk. Haven’t seen one from you yet. I’ve gone out on a limb twice on this site with specific forecasts. First, in 2010/2011 I said ESRI’s net emigration estimates (let alone forecasts) were rubbish. Then, in summer 2014 I said forecasts of GDP/GNP growth in 2014, both government forecasts and private organisations’ forecasts, were ‘far far too low’. I have been proved spectacularly correct in both cases. What’s your record? I realise the pain you must be suffering, however, that someone from rural Ireland can get it right, while the cream of Dublin 4 keep getting it wrong.

Off to bookies now to bet £50 on Donegal for Sam. Lets bring him north of the artificial border yet again. Would be better if it was Tyrone, of course. Hope I’m as good at forecasting this as I was at the other things.

@ All

Stephen Collins on the upcoming budget.


I could not help but remark on the unthinking acceptance of a distorted view of what budget making is all about as reflected in the following.

“Managing expectations and directing resources into areas where they will deliver maximum political benefit is the tricky task facing Michael Noonan and Brendan Howlin as they put the 2015 budget together.”

There is simply no popular pressure, or even the awareness, that would change the situation.


Its over! Get over it! It was the business of the Scots only in any case.

You are doing much better on the other forecasting fronts.

Less than two years ago the common reaction of individuals who echo the official line was to treat criticism of the Irish corporate tax regime from people like myself as a threat to jobs/ unpatriotic.

Interesting news today that Ibec has accepted my advice to embrace reform and now wants action next month on closing down the Double Irish Dutch Sandwich tax dodge scheme 😀

So the elimination of fake services exports of over €40 billion will be a start in getting clean national accounts.

In the meantime the trade unions should press for pay rises using the Dept of Finance data that unit labour costs have fallen by 21% since 2008 😳


re: QE Interest free loans proposed by David McWilliams:

I am surprised that you think this is outlandish (and find the personalised comments re D McWilliams offensive).
Why is QE as proposed by D McW so outlandish, when QE as currently practiced gives out virtually interest free loans to the financial sector, supported on the face of it by questionable collateral within those institutions.

Collateral that, in any case, depends on the economic well being, goodwill, and national government willingness to insist that those collateralised loans be repaid or the collateral forfeit, in the event of default. Not much of that in the Irish BTL sector, is there?

To my mind QE as proposed by D mCW is far more justifiable, and would be far more effective than QE as currently practiced in the US, UK etc.

@JR I did not mean to offend you, apologies. D has made it well known to me that he takes offence and has responded in spades both personally and in blogosphere .
Let us remind ourselves that D roundly condemned the LTRO program as printing money no less.
We all know that one of the problems is getting the liquidity flowing from the banks to the punters. D’s solution of bypassing the commercial banking sector and doling out interest free loans directly to the punters is as ridiculous as his suggestion that the solution to the mortgage debt problem is to wipe all mortgage debt clean. If you don’t see that I could become in danger of causing you further offence.

DOCM I’m not sure JtO actually predicted a Yes win. Perhaps he did which would have been rash considering the betting market’s persistent dismissal of the possibility even after Murdoch’s bizarre intervention.

@ BW2

“We all know that one of the problems is getting the liquidity flowing from the banks to the punters. ”

How do you think they can fix the credit transmission system ? It seems a lot of stuff is going via the shadow banking system , which has the same problem as banking- long term lending against short term assets- but none of the regulation.


“When you make an accurate forecast, then you can talk. Haven’t seen one from you yet. I’ve gone out on a limb twice on this site with specific forecasts. First, in 2010/2011 I said ESRI’s net emigration estimates (let alone forecasts) were rubbish. Then, in summer 2014 I said forecasts of GDP/GNP growth in 2014, both government forecasts and private organisations’ forecasts, were ‘far far too low’. I have been proved spectacularly correct in both cases. What’s your record? ”

You’re a parody. Are you Paul Howard by any chance ?

Anyone? BW II?. Just how statistically reliable are those G*P estimates? Seem to me, not very.

They fail to measure – presumably in a reliable quantitative manner:

income changes and distributions
un-waged labour activities
actual savings – not the repayment of debts
uneven price increases (decreases) – asset or property ‘bubbles’
transactions in the grey and black markets

If the EZ continues to stagnate, at some point it will be necessary for Ireland and other deeply indebted countries to do a deep root and branch pruning of our fiscal and monetary regimes.

Bill Abram a high school teacher outlines the contribution of Gerald Grattan McGeer to Canada’s Bank of Canada Act of 1934.

“Historically, the Bank of Canada functioned as the financier of Canadian public deficits in the Federal, Provincial, and Municipal budgets providing loans to fund government spending at interest rates as low as 1%. This practice allowed for public debts to be repaid more quickly, but at the cost of higher inflation.”

These conditions pertained from 1934 to 1974.

Here are some links.

I would expect that a system that arose in the dire circumstances of deep depression in 1934 would only be contemplated in Ireland as a last resort. It may not come to that but if it does there are more ways than one to skin the cat.

@ MH,

If tax professionals and business lobbyists are proposing changes to corporation tax rules you can be pretty sure that the one thing that won’t happen as a result of the changes is that companies will pay more tax. As has been pointed out repeatedly any change will be made for appearance purposes only – R for reputation. Ireland’s rules, for example on residence, are not of unique importance in the tax planning of US MNCs at the centre of the debate. The OECD have made proposals that look like they could have an effect but the outcome is still far from certain.

@ Seamus

I think a lot of MNCs need tax avoidance to make the numbers look good and keep those bonuses coming. Inappropriate management incentives are one of the main flaws in the system as is. You get companies borrowing money at low interest rates to fund share buybacks – zero strategic use but it gets the share ratios looking good and justifies more bonuses.

And the big 4 accountancy firms would lose so much in income if we had a more rational system that supported financial stability.

Systemic Risk in Europe

Deutsche Bank tops the list!


Do you have any evidence of companies leveraging up to do share buy backs to a greater extent than before. I would love to see the data. If anything corporate balance sheets are unlevered.


RE: Finland.

I take your point on stats vs. personnel experience. There’s a popular national sport of taking ANY experience abroad and using it support a case against self rule. X is so good in Y place, we make or would make a balls of X in Ireland etc etc etc. IMO The biggest distributors of Paddy whackery are the Irish themselves.

No doubt we have better motorways. Bertie certainly delivered on that. Though theirs are adequate, they also have more trouble with maintenance of course, with those tough winters. Cost of living is on balance more expensive. Property not so much, but hotels/eating out/taxis/trains definitely. Though childcare, education, medical treatment is cheaper/’free’.

As you say a lot of the ‘better’ ‘worse’ than comes down to your priorities. Day to day I enjoy city life, living near where I work, having access to good services within walking distance, being close to friends and parks and not needing to spend a chunk of my life in a metal box. Not that I don’t enjoy ‘the country’. I’m a Sligo man and love getting ‘home’ when I can.

A lot of Irish people enjoy a proper house with a garden. Each to their won. Though currently we pay a price in terms of the viability of certain services as a result. Public transport being the obvious example. If Dublin wasn’t such an urban sprawl we’d have built a rail link to the airport by now. More SMEs would also viable with more population density etc etc

Then again, in 10 years we might all be flying around in self driving, carbon fiber, fully automated, electric cars running at 300km/h and powered on wind blowing in off the Atlantic. With a 100k trip taking 20 minutes and costing 50 cent. In which case, public transport will be a fleet of auto cars, rail links will be a stupid idea, one off housing a great one (economically speaking) and the west of Ireland would see a population boom.

By the way I’m with you on the child care. I too am glad my mother raised me. I’m glad my parents could do it. Nowadays though it’s not really an option. Most mothers simply can’t afford to stay at home. In the short term they’d be no worse off financially because of the high cost of childcare but in the long term they fear for the difficulty of rejoining the work force. Housing is so expensive for most that 2 salaries are a necessity. Hence Irish women are having fewer children, later and getting the grandparents or cash economy involved where possible.

It’s the neo-liberal dream. The more worker bees as debt slaves the better. Next stop inter-gerenational mortgages. Drop the kids to work instead of childcare.

@ Seamus Coffey

The Economist, current issue:

“So the news that the world’s biggest economies have agreed on a plan to limit ‘base erosion and profit shifting’ in corporate tax is something of a watershed.”

The Financial Times, Sept 17:

“Those wary of reform will urge caution, pointing to issues that remain unresolved. The fast-evolving digital economy is an area where combating tax avoidance is proving difficult and there is much to be done. There are sharp differences on the definition of harmful tax practices. One country’s spur to innovation is another’s race to the bottom, as shown in the simmering row about the UK’s patent box.

“But what is most striking is the progress made rather than the obstacles ahead. Now the task is to maintain this momentum. For too long the highly technical topic of corporate tax avoidance has been driven by populist outrage. Public embarrassment may be a powerful weapon – and one which assists politicians in cracking down on companies. But it is also a crude instrument. If governments fail to build on the OECD’s manifesto, policy can only get clumsier.”

Do not allow your pessimism to blind you to the evidence: most issues that were covered in last Wednesday’s announcement were agreed unanimously by the 34 OECD member countries and 10 others including China + India.

Gridlock in Washington DC will not stop for example European countries implementing new rules including country-by-country reporting by companies, which will require them to report the amount of revenue, profit and tax paid in each jurisdiction, as well as their total employment, capital and assets used in each location.

Feargal O’Rourke of PwC remains an outlier among the big Irish tax advisory firms in advocating preemptive closure of the Double Irish Dutch Sandwich dodge.

So your assumption about tax professionals in general is wrong.

The evidence from the Ibec position is that firms assume that big changes are on the way and there is some wishful thinking on attracting intellectual capital.

However, evidence from the last decade suggests that it will be a challenge to attract significant research projects.

The ease in which Accenture in 2009 transferred its intellectual property valued at $7 billion to Ireland in 2009 will not be available in future and less than 30% of IDA Ireland’s clients spend any funds on R&D while despite self-interested claims that the 25% tax credit has resulted in MNCs ramping up research in Ireland, it remains at a level that doesn’t merit patenting – if a vested interest considers this claim negative, check the data.

Israel and Asia have been the favourite overseas locations for US MNCs strategic research facilities.

OECD & Tax: Everything grand in Ireland’s Republic of Spin?


GDP fetishism is the opiate of the masses: Have you heard the news?! GDP is up!. Never mind who benefits. Eventually, after the wealthy have had their fill of new Range Rovers and BTL property, some of that wealth will trickle down to you! Hell, if this keeps up, we might even be able to “afford” Special Needs Assistants (not before the Anglo-Irish debt gets paid off in 2045 or so, mind). In the meantime, let’s cut that top tax rate. The people have suffered enough!

Ah, negative GDP, it’s what every hardcore socialist really wants so that we can finally have equality. At least Ernie is honest.

@ MH

Why not go the source?


Everything anyone wanted to know about corporation tax but was afraid to ask!


The issue, however, remains the nature and scope of the binding legal agreement(s) (commitments, enforcement, arbitration in the event of disputes etc.) that will apply globally. If you can point me to them, I might revise my poor opinion of the OECD as a form of international organisation to deal effectively with issues such as tax.

@ Tull


“Sales of US corporate bonds are increasingly reflecting lower credit ratings as companies take advantage of historic low interest rates and yield-hungry fixed-income investors to borrow record amounts in wide-open debt markets.
Much of the borrowing is being used to return cash to shareholders or finance acquisitions, in a move that is boosting leverage levels at many American companies. At the same time, bond investors appear to be ignoring ostensibly weaker corporate balance sheets in their hunt for higher returns.
That could come back to haunt them if interest rates rise and spark defaults – at which point investors could rue their failure to differentiate between credits.”

Share buybacks instead of investment is stagnation friendly.

Thanks for that. From my experience though, we are not anywhere near the excesses of 2006-07.
Rates and spreads are low though so there will be the odd rocky month as they go up. Cash flows though will improve as the growth rate in the well governed Anglo Saxon market economise accelerates. I would not be as positive about the sick old continent but at least there is an adult in charge now and policy will stay easy.

Surpised by all the high fives and backslapping. Unemployment is what, 10-12% not including those who have emigrated, 6 years after the crash, 3 after the IMF..why is this so good ?


“…I might revise my poor opinion of the OECD as a form of international organisation to deal effectively with issues such as tax.”

You’re entitled to your opinion but it doesn’t appear to be an informed one.

Wonder why China would have agreed to have the OECD, a think-tank for mainly developed countries, propose new international business tax rules, if the organisation hadn’t decades of experience in working with non-member countries on issues such as tax, investment and development?

Wonder why Austria and Luxembourg could put an amendment to the EU’s savings directive on hold for six years to protect banking secrecy and then in 2014 they agree to sign an OECD protocol on automatic exchange of bank information?

The EU tax commissioner said:

“Switzerland and the four other countries now accept that the automatic exchange of information must be at the core of their relations with the EU in taxation.

“This would have been inconceivable even a year ago, and it shows how far we’ve come in changing mind-sets globally.”

Switzerland would never amend its 1934 bank secrecy law was the conventional wisdom. 😕

More than 65 countries and jurisdictions have already publicly committed to implementation of the OECD’s standard, while more than 40 have committed to “a specific and ambitious timetable leading to the first automatic information exchanges (AIE) in 2017.”

AIE is very important because the existing system that applies in many countries is that foreign tax authorities have to apply for information on a case-by-case basis.

“Almost overnight legal business practices become unacceptable,” said Patrick Odier, president of the Swiss Bankers Association, this week at the group’s annual general meeting. “I’ll put it simply: the banks in Switzerland accept AIE. We’re not doing it because it’s the best solution. We’re doing it because it has prevailed internationally,” said Claude-Alain Margelisch, chief executive of the association.

On the OECD’s BEPS program, individual countries will have to implement changes and like crime, international tax evasion and avoidance will never be abolished, but it’s foolish to ignore the remarkable developments of recent times.

Both conservative and socialist governments are publicly committed to a crackdown on avoidance.

At the weekend, Joe Hockey, Australian treasurer, said: “our government is absolutely determined that Australian tax is paid on profits earned in Australia”.

“We are absolutely determined to ensure that companies and individuals pay tax in Australia on their earnings in Australia,” he said, while conceding the digital economy made that task increasingly difficult.

“The OECD’s initial guidance…, if adopted by key OECD member countries and observers as expected, will have a significant impact on US multinationals with overseas operations, whether or not the US makes changes in regulations or practices as a result of the recommendations,” said Manal Corwin, national leader of International Tax at KPMG LLP and a former deputy assistant secretary for tax policy for international tax affairs at the US Treasury Department, according to The Wall Street Journal.

It would be naive to expect that the status quo will remain in Europe: no matter who is governing the UK for example, Apple, Google and Amazon will likely have much bigger tax bills in coming years.

The Institute of Fiscal Studies said this week that austerity will continue during next Tory, Labour or Lib Dem parliament despite the recovery:


George Osborne, the current chancellor, has already form in going after personal tax evaders.

Of course it won’t all be plain sailing but the direction of the prevailing winds has changed.


“Both conservative and socialist governments are publicly committed to a crackdown on avoidance.”

I’ll believe it when I see it. Vodafone can be the test case.

@ MH

You are tilting at windmills that I have not built, to mangle metaphors a bit. The question I posed was whether you could supply me, and other bloggers, with the legal instruments binding all the countries of the OECD in the context of BEPS.

Windy commentary from the politicians involved and less than binding texts such as the “recommendations” from the OECD (or, from what you say, the decision of some EU countries to sign up to one of its legal instruments rather than an EU legislative directive), will not do he trick.

I am not contending that nothing is happening. Rather, I am trying to understand the extent of it against the background of my belief that the constitution of the OECD as a purely inter-governmental organisation means that it is almost invariably much bark and very little bite.

P.S. To my knowledge, it was not “international opinion” but pressure from Uncle Sam – the enforcer – that lifted the veil on Swiss bank secrecy. This is not unrelated to the fact that it is the only country to tax its citizens on income irrespective of their location. US lawmakers seem to have a different attitude to corporate identities (which is what is under discussion) or, rather, they have no choice with regard to individual taxation because of a long-standing US Supreme Court decision.

@ JTO et al

FYI this piece by Eilis O’Hanlon which IMHO is as good a commentary on the Scottish referendum from an Irish perspective as one is likely to find.


The one major reservation I would have relates to her apparent unquestioning acceptance of Ireland as a victim solely of outside forces. (“On the other hand, if someone had said to Ireland at the start of the financial crisis that we could wrestle control of our own destiny from those who had brought about ruin, even if it took a few black years in the meantime, I’d have gladly taken it, because there’s something innately appealing about the idea of going it alone”).

As the premise is fundamentally faulty, it is just as well that no one did!

The “victim of outside forces” syndrome is universal. Notice how Americans believe they are being victimised on all sides to the point of paranoia.

In Ireland we have elevated it to a fine art after centuries of refining it under British rule. It is the first crutch we reach for. God forbid that we should ever admit we did it to ourselves. The bank bail out for example was as a result of intimidation by Brussels, Frankfurt, Berlin and others. It most definitely was not the result of expensive consultant advice out of New York and we surely could not blame the Gov’t, D o F, Bank regulator for being helpless spectators.

In France, tax relief for low paid.
Affects first tax tranche (eliminated) Euro 6,000 to 12,000. One third of all tax payers, six million homes described as working and middle class with savings of Euro 230 per yr for singles to Euro 1100 for couples with 3 children.

I will let the cognoscenti here compare France’s “taxes for the wealthy and relief for the low to moderate incomes” with our home grown initiatives.

@ DOCM / seafóid

There is no world government yet and no “legal instruments binding all the countries of the OECD” nor can the European Union force any member country to change its tax system.

So you could be right or wrong if you think the G20/OECD project could end up nowhere.

There has been a definite “sea change” and a “clear break” from a culture of aggressive tax avoidance, Frank Haskew, head of the tax faculty at ICAEW (Institute of Chartered Accountants in England & Wales) said in 2013.

The sceptics have been surprised so far.

In 2013, Jesse Drucker of Bloomberg News wrote:

“Google Inc. (GOOG), Facebook Inc. and LinkedIn Corp. (LNKD) wound up in Ireland because they could reduce their tax bills. Their success is leading European and U.S. politicians to label the country a tax haven that must change its ways.

The grand architect of much of that success: Feargal O’Rourke, the scion of a political dynasty who heads the tax practice at PricewaterhouseCoopers in Ireland. He advises both multinational companies and the government on tax policy and has emerged as his country’s leading defender.”

Feargal O’Rourke is a tax expert who sees the BEPS project as a game-changer.

1. The Netherlands, Ireland, Luxembourg and Switzerland, Europe’s main facilitators of corporate tax avoidance, have signed up to the project. They could reverse course!

2. The US have gone after Swiss banks for facilitating evasion by its citizens while Germany’s foreign intelligence agency, the Bundesnachrichtendienst (BND), in 2008 was involved in purchasing a DVD with details on German evaders at a Liechtenstein bank. Lander governments have also put pressure on Switzerland as has the French government and the European Commission has forces it to change its corporate tax system.

3. In the UK public tax protests against Philip Green, owner of the Arcadia fashion group, and Starbucks, were factors in getting the attention of politicians in the UK.

There was cross-party support on the House of Commons Public Accounts Committee of criticism for tax avoidance by Google, Amazon and Starbucks.

4. Local companies in countries are beginning to realise that they are held to account while foreign companies can uses various schemes to evade or avoid taxes.

@ Tull

“Rates and spreads are low though so there will be the odd rocky month as they go up.”

Rates are low due to the macro situation which is fine but a lot of liquidity risk, default risk and general risk margins have been stripped out of pricing. You have junk bonds yielding 6%. A lot of stuff is priced on comparison with other assets and there are loads of one way bets because “you never bet against the Fed”. Big pile ins into stuff like ETFs with poor liquidity if the music stops and shadow banking is taking long positions without much oversight if things go wrong. Hanging above it all is the anaemic US recovery- 2.1% growth this year per the OECD, a big Q1 hit (-3% annualised) due to climate change. This winter could be very bad again. . Bonds are v expensive and so are equities- the former indicates stagnation, the latter expansion. One of them is wrong.
The regulatory system is not ready for another crash.
A small correction now would actually be very healthy for the system.

Allow me to parse that FT subtitle: “Strong Growth Shows That Tough Choices (for the weak, the politically unconnected and the less well off) Do Pay Off (for the kinds of people who read the Financial Times).”

You have been singing that tune since about 666 on the S&p so if there is a correction it will be now where near enough to vindicate your bearishness. You have called 5 out of the last zero market crashes.
You are on the cusp of being awarded the JTO duff forecasting award.

You have been saying that for years. Eventually there will be a bear market but the trough will be well above the level at which you turned bear.


“The ability of US companies to deliver faster revenue growth this year has met with scepticism from Wall Street analysts, indicating that the economy faces a challenge to sustain a broad recovery in the coming months.
Since the start of April, analysts have lowered second-quarter revenue growth estimates for S&P 500 companies to 2.8 per cent from 3.5 per cent on a year-on-year basis, according to FactSet.
The drop of 0.7 percentage points for growth estimates is running at above the quarterly average decline of 0.3 percentage points seen for the past four years, said John Butters, analyst at FactSet.
The pullback in revenue, or top line, estimates shows how companies are relying on cost-cutting to propel their earnings higher and justify record stock prices. Some investors worry the sluggish revenue backdrop is a signal that the economy, dominated by consumer spending, faces headwinds from high food and energy prices against the backdrop of modest wage rises as companies focus on controlling costs.
“The cut in revenue estimates is very disturbing,” said Jack Ablin, chief investment officer at Harris Private Bank. “Revenue growth reflects the economy and is a variable that management cannot manipulate, it’s the purest measure of a company’s growth rate.””


“I think the longer term does not look good and eventually that will be reflected in prices.”

Extraordinarily vague and McWilliams-esque in its informational uselessness.


There is no point in saying it’s going to crash on Wednesday because it probably won’t. One of the problems with the system is that the safer the CBs make it the more risk punters take.

The usual thing is a build up of pressure that explodes. A lot of assets turn out to be crap and then it’s pass the parcel as the panic develops.

Why might this happen in the equity market? Because companies are not investing in their businesses and using the wrong metrics to measure progress. Incentives are a massive issue .


Remember what Greenspan said in 2008


“Alan Greenspan, the former Federal Reserve chairman, said on Thursday the credit crisis had exceeded anything he had imagined and admitted he was wrong to think that banks would protect themselves from financial market chaos. “I made a mistake in presuming that the self-interest of organisations, specifically banks and others, was such that they were best capable of protecting their own shareholders,” he said. ”

Fair enough if you want to think it’s My Little Pony next year and on into infinity. That’s your right. I just think the whole thing is extremely fragile.

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