Earlier in the week I contributed to a session at the MacGill Summer School on threats to the economy. My speaking notes for the presentation are here though delivery may have been slightly different.
We can build 40,000 houses a year, motorways between our regional cities, urban rail connections in the capital, and the roll-out of broadband across the country. We can reduce taxes, increase social transfers and public sector pay. We can spend all the benefits of the surge in Corporation Tax, ultra-low interest rates and the proceeds from the sale of the banks. They are our choices to make. But we cannot do it all and expect the benefits of prudent economic and budgetary management. No lobby or special interest group sees their request for support as being the one that pushes the economy into the red. And they are right; but we have to watch the totality of what we are doing. If we try to do too much and fly too close to the sun we will fall to earth. The biggest threat to the Irish economy may not be the decisions of Teresa May or Donald Trump; the biggest threat to the Irish economy are the choices we make ourselves. Let’s make a better fist of getting it right this time.
21 replies on “Presentation to MacGill Summer School”
This is a balanced and sensible assessment, but I’m not sure who the audience really is. For the governing pols recently released from Leinster House and for the McGill Summer Scholars all the fiscal moithering comes down, very conveniently, to a few hundred millions one way or the other – though there may be a bit more in play this year and next. The big fiscal aggregates last year were back very close to where they were in 2007. There was around €29 bn for public pay and expenditure on goods and services and nearly €35 bn for all the social benefits, transfers and subsidies. Tax revenue and social contributions came in close to the same in total. The cost of living relative to that in other EU member-states is back to its 2007 levels. Ireland is second to Denmark in terms of the price level of private household expenditure. That’s why we need the great re-distribution to compensate those on low and fixed incomes for the rip-offs and rent-seeking of those exercising power and influence in the sheltered private, public and semi-state sectors.
Economically it’s a very inefficient way of doing things – officially facilitating egregious and regressive over-charging, rent-seeking and inefficiencies and then compensating the low income victims of this overcharging via social transfers administered at enormous expense. But politically it’s a complex mechanism of wondrous subtlety that is played to perfection by the seasoned performers and, most of the time, maintains an extraordinary political stability.
Occasionally, even the most accomplished performers can go way off-key. Former ministers Hogan and Rabbitte got it gloriously wrong with the water charges. They were trying to be too clever by half, trying to square one circle too many, but enough voters got a glimpse of various troughers, even if they didn’t spy the full colony, and decided enough was enough. It can be a very delicate balance, but it’s part of what we are and we really wouldn’t want it any other way.
Thus far, it’s been a good week for tales of economic folly. Somewhere down the back of the couch the Government has found €170m, or so, in spare change. Or maybe it was stuck in that ‘current expenditure’ jar at the back of the cupboard? Not to worry, it’s precisely the amount required to reimburse those citizen-households who paid their water charges last year. Thus the ‘Irish Water’ fiasco rumbles on. As Irish Examiner columnist, Gerard Howlin, observed: “This is the reflux of the State’s incapacity to launch a major infrastructure project, have a public body win public esteem, and implement a charge to pay for it.” The failure has been a political one, which in its wake carries longterm economic and environmental consequences.
Without a hint of irony, next up is Engineers Ireland demanding the Government set up a ‘single infrastructure unit’ to deliver on all urgent major infrastructure projects including rail, water and broadband. The IE request is made for all the right reasons. It appears to make sense. That is, until one thinks about the HSE, and what became of a ‘good idea in principle’. Or how there was a ‘near miss’ in watching Irish Water go the same way. That is, until that body was effectively derailed by a combination of public protest in the face of manifest organisational incompetence, political opportunism, followed by political bungling, and finally some astute political calculations amongst those parties that aspire to participate in government, whether now or at some stage in the future.
All of which makes Seamus Coffey’s concluding insight appear even more apposite: “The biggest threat to the Irish economy may not be the decisions of Teresa May or Donald Trump; the biggest threat to the Irish economy are the choices we make ourselves. Let’s make a better fist of getting it right this time.”
In terms of the current Government’s proposal to establish a ‘rainy day’ fund from 2019 for example, in his MacGill speech Prof. Coffey rightly queries the underlying rationale for this particular project and invites further public debate around it. However, it’s important to take account of the political consequences for the Government – or at least the Fine Gael part of it – of resiling from any existing commitment in its agreed programme within the lifetime of this particular Dail. If, as anticipated in some quarters, a general election should occur towards the end of next year, the ‘rainy day’ fund project may simply drift away into obscurity. However, other more redistributional issues raised in the speech remain immediate and will require difficult choices. Of course IFAC can only proffer advice based on what appears to be in the best economic interests of the country. Political choices are bounded by what is feasible in terms of being able to govern the country. More often than not, they’re not the same thing, and perhaps it’s well to bear that in mind in our discussions.
You’ve hit the nail on the head, Veronica, with your “Political choices are bounded by what is feasible in terms of being able to govern the country”. I’m moderately optimistic about governance in the medium term because enough voters refused to give either FG or FF the electoral basis to form a majority government. Whether by accident or design, enough voters seem to have learned that governments with secure majorities abuse their excessive executive dominance and that it is they (the voters) who suffer when the pols and the influential special interests to whom they are beholden lose the run of themselves. It’s far from ideal, but just enough governance is provided when it’s required. Sufficient unto the day is the evil thereof. Of course, both FG and FF are grigging to manoeuvre themselves in to a position where one of them will be able to form a majoirty government. But I’m not sure enough voters are comfortable with letting one of them off again, since both have been captured almost equally by the influential special interests. And it’s taken voters two elections, 2011 and 2016, to put FF, the Greens, FG and Labour in to their current boxes. I suspect, and hope, it’ll take more than one election before enough voters will be content to allow either FF or FG out to form a majority government. This de facto grand coalition isn’t all that bad.
But it needs to be supplemented because wider delegated governance of economic actvities, such as economic regulation and competition law enforcement, is a total joke. It was always a policy-implementing function pandering to the relevant special interests in the various sectors, but in quintessential Irish fashion disbelief was suspended and optical illusions projected. The reality, however, has been exposed for most of them such as the aviation regulator and the supine competition and consumer protection body, but in particular for the CER when enough citizens rejected its “decision” on water charges in October 2014. Citizens have to rely on EU bodies if they want to curtail the rip-offs to which they’re exposed. This was highlighted recently in relation to an alleged insurance rip-off when dawn raids were conducted by officials from DG COMP, with Irish officials sheepishly tagging along.
It’s an uneasy compromise, but once there’s sufficient fiscal largesse to fund the Great Redistribution it’ll be possible to keep the show on the road. Of course something similar to the Great Distribution happens in all of the advanced economies, but unlike say Britain where there is a single state buyer for health with the NHS or for education there are far more moving parts and discretionary elements in Ireland. And that’s all part of the charm.
The point made by Seamus Coffey echoes remarks by Patrick Honohan in a speech to the Royal Irish Academy in 2014.
“…the conditions of macroeconomic imbalance can change quickly in Ireland, not least because of its exceptional openness,” Honohan said.
” Seemingly intractable imbalances have been corrected surprisingly quickly; balanced conditions have suddenly slipped out of control.The policy message here is one of optimism that at least some elements of current conditions can be made to swing around more quickly than is often supposed; and of vigilance that slippage does not occur again.”
The ‘vigilance’ referred to here is required in how, and what, national policy choices.are made.For sure, the Central Bank, IFAC and a plethora of economic advisory agents like the ESRI, NESC and individual economists with established expertise on particular subjects, can point to the likely consequences of ‘bad’ policy choices. But to what extent should the expert community factor in the constraints that apply to political choice of one policy direction over another? To what extent would acknowledgement by economic experts of potential national political consequences of ‘doing the right thing’ confer greater legitimacy in the wider sphere of public opinion on their specific messages to the body politic?
Just askin’! And yes, I take your point about the greater ‘charm’ attached to having many moving parts in the policy-making apparatus.
I think you’re going back to the question I raised initially about the audience for Seamus’s presentation, because there’s a broad consensus among the practitioners on the macro and fiscal issues. And this consensus seems to be reflected in the apparent acceptance by a large number of voters of this de facto grand coalition. They don’t want any repetition of the economic lunacy fomented by Martin O’Donoghue in 1977 which led to the lost GUBU decade or the triple bubbles which FF and the PDs started to inflate in the early 2000s and which have led to another lost decade. That’s why I’m moderately optimistic about governance in the medium term.
Not surprisingly, the economists we hear are those focusing on the macro stuff. It’s become comfortable territory. Despite occasional volubility in private, those with some competence have no interest in tackling or incentive to tackle the micro stuff. In fact they have every incentive not to and to pander to the various powerful special interests that dominate the micro sectors. That’s why ordinary citizens need access to the EU agencies. There’s no effective redress available at home.
“… to what extent should the expert community factor in the constraints that apply to political choice of one policy direction over another? To what extent would acknowledgement by economic experts of potential national political consequences of ‘doing the right thing’ confer greater legitimacy in the wider sphere of public opinion on their specific messages to the body politic?”
Veronica – there are few, if any, economic ‘experts’ about the place. What we do have is a considerable bunch of folk (pols, economists, various hanger-ons and the vast throng of the Great Unwashed) all of whom are kitted out with a personal set of Economic Theory – Virtual Reality Goggles. The economists have diligently fashioned and firmly applied their own theoretical goggles. The residuals have simply copied them – thinking (or rather knowing) that they must be ‘doing the right thing’. I would not describe the situation as ‘charming’ any more than I would apply the same term to a Polar Bear actively sniffing out a seal for dinner. Charming ursurian acrobatics to a distant observer maybe, but I doubt the seal is amused.
Haha. Though I doubt that the contributors to this site would be pleased to see their expertise so dismissed!
The point at issue here is less about predator/prey competition than collaboration within a species, or community, to achieve the best outcomes for all member groups in policy decision-making.
Hence, it’s about how knowledge/evidence of how things work, which develops from specialised research, plus analysis/interpretation of how that knowledge may then be applied, whether to resolve a specific problem or to contribute to the overall well-being of society, can be effectively transferred and taken on board, or not, by others. These ‘others’ include, for example, politicians, whose own base of expertise is entirely different in scope and purpose to that of ‘expert advisors’; or various interest groups primarily concerned with their own self-preservation. It extends to the general public who, by and large, may have no interest in the original body of expertise or the mechanics of how the evidence and its analysis was produced in the first place, but are invested in its credibility for their own current and future well-being.
Experts of all stripes get it wrong. Policy-makers don’t think like economists (thankfully!).Contrary to the assumptions of some experts and policy-makers, the public are not stupid either. The last lines of Seamus Coffey’s speech may be construed as a ‘plea to reason’. If, as he says: ” the biggest threat to the Irish economy are the choices we make ourselves. Let’s make a better fist of getting it right this time” is to be taken seriously, then those with a stake in the choices made will need to find better ways of listening to one another..
Thanks for that. Bang on. I see the cranes around Dublin everyday and think the same thing. I hope we don’t over shoot on the construction side again and fall in to the 2000s loop of bringing in Polish lads to build houses to house Polish lads.
As an English speaking economy with full employment and low income taxes on the 35ish mark. We are an attractive destination. Perhaps more so now with the uncertainty future for EU immigrants in the UK. And their property market downturn.
Also agree, best to bin ‘rainy day fund’ and start with ‘rainy day surplus’ objective. As well as a much needed ‘broaden the tax base’ objectice.
A surplus will also keep our refinancing rate lower, leading to lower interest rates on debt we’re rolling over. So we’ll get paid to have our shock absorber.
Excellent piece by Seamus Coffey.
The key question is not whether the economy will overheat again, but how long before it does so. The business cycle is not a myth, despite the world being full of failed politicians who claim to have abolished it (Gordon Brown being a recent example). All economies see a rise in inflation, over-consumption and a worsening external deficit after a prolonged period of full employment. The difference between economies lies in how long they can keep growth going before that stage is reached and how high the growth is during the periods of growth.
All the evidence is the for Ireland both these are exceptionally high. This is Ireland’s third boom. The first lasted from 1958 to 1982. The second lasted from 1986 to 2007. So, the normal time period for a boom in Ireland is over 20 years. On that basis the current period of strong growth will last until the mid-2030s. Of course, there is always the possibility of some malevolent external event (war, oil crisis, terrorism) that bring about an economic downturn before its time.
The current boom has been going on for 5 years. Based on the new GNI* measure, it looks real growth in Ireland has averaged 7%-8% annually since then. It shows no sign of slowing. Yet, after 5 years of super-growth, Ireland has a negative inflation rate (the only EU country to have one) and a large and improving balance-of-payments surplus. The economy shows not the slightest sign of overheating. I doubt if there is a single other economy in Europe that could achieve this combination. The UK economy invariable runs into a balance-of-payments crisis after 4 or 5 years of 3%-3% growth. Its doing so again now. While mist of Europe can achieve growth above 3% only in their dreams. That Ireland is able to achieve such a combination of super-high growth, while showing no signs of overheating, is testimony to the economy built up over many decades by Sean Lemass, Jack Lynch, Charles Haughey, Albert Reynolds and Bertie Ahern.
I mentioned above the possibility of some malevolent external event bringing about a downturn before its time. A year ago the cognoscenti were all claiming the Brexit referendum was such an event. It has turned out to be a damp squib. Growth in Ireland has continued as before, The fall in unemployment in the year since the Brexit referendum has been over twice that in the year up to the Brexit referendum.
One possibility that can be dismissed entirely is that Ireland is about to have another property-led recession. This is now the favourite of the ‘dismal Johnnies’ who dominate the media. It is, of course, absurd. The main element in the 2008-2011 recession was a fall in house-building from 85k per annum to 8k per annum. This knocked 10% off GNP. It can not be repeated in the foreseeable future as currently house-building is only 15k per annum and far below the rate of population growth. For the next decade at least, house-building can go only one way, UP.
Of course, its not ideal to be having to frantically catch up in relation to building houses for the rapidly-growing population. The biggest mistake Ireland ever made was to let house-building fall to such low levels. It should never have happened. It did so because Ireland at that time was being swept by a wave of manic pessimism. There should be a Dail investigation into why the now-discredited doom pornographers of that time were ever allowed to have so much influence. At least we can be thankful that Morgan Kelly’s ridiculous prediction that Ireland would have to knock down a few hundred thousand houses never happened. I dread to think what the housing shortage would be now if that had been done.
PS I have just joined twitter (the last person in Ireland to join). My twitter name is jtostats (link below). In between the usual links to media articles, I hope to post lots of nice graphs and charts. I already have a dozen or so posted, dealing with housing, inflation, migration, life expectancy stats.
I’m also linking my twitter account to a blog (Statsblog Ireland) where I give more detailed analysis and a wider range of graphs and charts. However, the blog development is still in its infancy and its nowhere near finished, so best ignored for now. I hope to have it ready by the end of this year.
Sensible (mostly) and entertaining commentary by Seamus. I wonder about the number of ‘private dwellings’ that are being suggested as being needed. I assume that if X are built, there will be X (or close to X) willing and able buyers. Is this a ‘safe’ assumption any more?
The 2007/2008 financial crisis was about an awful lot of virtual money being braced by some very dodgy collaterals. The next financial crisis will (maybe) come about following a slow-motion, relative reduction, in Irish median incomes resulting in more-and-more folk not having the required disposable incomes to keep the Irish Permagrowth paradigm moving forward at the 2% – 5% range. If Ireland’s economic expansion is currently estimated at 3.5%, but current global and regional economic expansions are at less than 2%, then its – “Dublin! – we have a problem!” Candy floss comes to mind.
Basically, a specific increase in the number of private dwellings being built and being offered for sale must be matched by a parallel increase in median disposable incomes so long-term resident folk can actually purchase the aforementioned dwellings. Have Irish median incomes increased in parallel with private dwelling price increases? Nope. Caution is advised here.
I note that some new and slightly restrictive credit controls have been introduced. But if the next financial crisis emerges due to a liquidity deficit – those credit controls will be damn all use.
“The point at issue here is less about predator/prey competition than collaboration within a species, or community, to achieve the best outcomes for all member groups in policy decision-making.”
Veronica – you have touched on a very interesting nexus here: that is, do we as Rational, Independent, Utility Maximiers – if that is even the correct way to classify us (actually its not, but just lets keep with The Goggles) – compete or cooperate.
Well, the Facts (the asumptions of Economic Theory) are straightforward, clear and accepted: we compete. Alas, the Alternative Facts are even clearer – although they are almost completely clouded by complexity*; we humans are incorrigibly co-operative.
So, its EconomicTheory (as it is stuffed into putty-like minds of novices and fools aike) Nil: Human Complexity 1. And that’s the Final Score. And there is no extra or injury-time and no penalty shoot-outs to change the result. What is quite odd is that when you read/hear the Sports Results in the MSM – the final scores are always reversed. Interesting.
* Our economies are uni-directional, very complex and heavily interconnected physical, dissipative systems which act on our environment – changing it. Those environmental changes then reflect back on us, and we react; that is, we change in response to the changes we experience. Our new reactions again reflect into our economy, which in turn reflects into our environment – changing it, again. And round and round we go – until an emergent event catches us unawares! Damn those Goggles!
By rights, I should give you the last word on this…except for one small thing! I thought that by now ‘homo economicus’ was long dead and buried with a stake through its heart. You appear to suggest that the creature still escapes its coffin to stalk the land, and the airwaves.
I wouldn’t be so hard on the theorists, though. A theory can be just plain wrong – think phlogiston in science – but in its error pave the way to an ultimately more sound explanation of how the world works.
Thanks, I have no need for ‘a last word’. Unfortunately the Economic Undead do still plod about. My beef – or rant, or whatever, is that current economic policies can be so destructive of both persons and their assets. Science is. The laws of nature are immutable.
Economics is a mish-mash of religious fervour, ideosyncratic ideology and political power neatly wrapped up in coating of mathematical symbolism. It cannot even explain itself. But its practitioners are not slow in dictating to the rest of us how we should organize and operate our economies. Richard Bookstaber nails it. Cheers – for now.
The point is well made about the cost of living. Aldi and Lidl have done more for Irish competitiveness than the Irish government. If costs can be held under control then welfare and pay rises can be less. Likewise the concept of efficiency is entirely absent in discussion of public expenditure, public pay is seen as a matter of political opinion rather than the remuneration for a job efficiently done. Does anyone know which councils are more efficient than others? If their way of doing things was spread across the State then there would be an improvement,
You are, of course, correct. But you’re attacking the entire architecture of Ireland’s political economy. We only ever talk about these things obliquely, or hypothetically, or in an international context, or a historical context, or in terms of international decision-making fora or bodies where Ireland has minimal influence (but where we can speculate entertainingly and wax lyrical) or using theoretical constructs developed in other contexts. There’s a whole parallel universe of discourse, e.g., the McGill Summer School (or look at the “Kenmare” Conference programme above), which gives the impression of getting to grips with important issues but never really does. The objective is to create an optical illusion, to suspend disbelief, to tantalise and to tease.
This happens in all of the developed countries. Those who wield power and influence are happy to encourage “debate and discussion”, but there are clear unspoken and unwritten rules about how far the analysis of this exercise of power and influence should be pushed. There are significant cultural variations in the definition and application of these rules. I’ve lost count of how many conferences I’ve sat through in various countries and wondered in awe at the variation of techniques applied to protect the interests of the wealthy and powerful. But the set of Irish techniques really takes some beating.
If these issues weren’t tackled effectively following the blow-out of the triple property, banking and fiscal bubbles I don’t see them ever being tackled other than in the context of war, famine and pestilence – which, unfortunately, but well-evidenced historically, are the only means of shaking loose the malign grip of the wealthy and powerful.
Dearg – ‘competitiveness’; ‘held under control’; ‘concept of efficiency’. This is just standard Neo-econ gobbledegook. Somewhere behind all this unexplained, and in-explicable vacuous terminology, are the assumed away, real, flesh-and-blood individuals: the human beings whose lives do actually matter. Contemporary economic policy has no use for human folk – they cannot be modelled mathematically. Tippex them out!
Please, can you explain how ‘financialized economies’ – whose only real and lasting product is debt, are ‘efficient’ or ‘competitive’. If our Central Bank (which is probably as useful as Irish Water) were shut down, would anyone (apart from the now redundant and our elected reps) actually notice any difference to their lives? Not much, I venture.
The real political issue at hand is how to ensure that the non-elites (waged-labour and salaried workers and their respective dependents) have adequate and sustainable levels of disposable incomes to actually thrive (as opposed to subsisting) in a high-service, low-production, low-carbon, FIRE economy. The WEIRD economies do not seem to be able to achieve this. And they will not. Subsistence economies are not much fun – except for the wealthy.
“By their undergraduate textbooks ye shall know them.”
The Oct Budget is not the key issue alone when it should be part of a plan for the next 20 years – that is the time horizon for increasing the very low number of exporting firms; raising the low business startup rate; improving innovation competence and reducing the dependence on FDI.
FDI firms account for 33% of Danish goods export value and about 20% of services export value. Depending on what adjustments are chosen FDI firms account for 80 to 90% of Ireland’s exports.
Both Ireland and the UK are dependent on foreign firms for the majority of R&D spending while total spending is low in both economies.
Ireland’s material standard of living per capita is in line with Italy’s while Irish net disposable income is lower despite Italy’s near stagnation for over a decade.
Conventional wisdom as usual was again blindsided by another external development. Brexit was a shock and now export markets have to be found elsewhere for indigenous firms — it’s of course a lot harder than the armchair experts suggest just as it is for the UK.
Irish Exports: Eurozone top market but poor for local firms
It is something of a myth that the current economic boom is reducing Ireland’s competitiveness or that Ireland has a particularly high cost base. If either of these were true, it is unlikely that the boom would be continuing the way it is, with no sign of endng.
First, if we look at inflation in EU countries over the past decade, Ireland is out on its own for low inflation. This encompasses both the period of recession (2007-2013) and the period of boom (2012-2017).
inflation between June 2007 and June 2017 (source: eurostat)
 Ireland +3.8%
 Portugal + 12.9%
 Cyprus +13.0%
 France +13.4%
 Greece +13.7%
 Germany + 14.0%
 Netherlands +14.2%
 Denmark +14.5%
 Sweden +14.7%
 Spain +14.8%
 Italy +16.3%
 Slovakia +16.3%
 Slovenia +17.2%
 Luxembourg +19.1%
 Croatia +19.3%
 Finland 19.7%
 Czechia 20.3%
 Austria +20.6%
 Belgium +20.7%
 Poland +21.6%
 Malta +23.0%
 Bulgaria =24.5%
 U. Kingdom +25.9%
 Hungary +32.6%
 Latvia +32.7%
 Lithuania +33.8%
 Estonia +36.2%
 Romania +38.5%
So, clearly Ireland’s competitive position has improved significantly over the past decade. It is the only EU country to have virtually stable prices over that period. It also helps explain why the recent fall in £sterling to around 90 euros has had so little impact. Its largely been eaten up by hgher UK inflation. This in turn has eaten into real incomes in the UK in a way that (because of low inflation) hasn’t happened in Ireland and goes a long way to explain the resurgence of the far-left (in the form of Jeremy Corbyn) in the UK, whle his counterparts in Ireland languish at single digits in the polls.
But, inflation only measures changes in prices, not price levels. We are repeatedly told that Ireland is a very expensive country. While there is some truth in that, its a gross simplification. First, no one should expect the cost of living in Ireland to be similar to that in, say, eastern Europe or the mediterraenean countries, where GNI per capita is barely half that in north-west europe. Second, media reports focus excusively on eurostat figures for consumption goods, whereas eurostat themselves also publish figures for government services and investment goods, which are largely ignored.
I have compiled the following tables which give eurostat figures for comparative price levels for the 14 wealthy countries of north-west Europe. These are the countries Ireland has to compete with. It matters little if prices are higher in Ireland than in Bulgaria or Cyprus. These countries aren’t competing with Ireland for any significant share of modern high-tech investment. Separate tables are given for (a) consumption goods (the most widely reported in the media) (b) government services (c) investment goods (d) whole economy (which combines (a), (b) and (c)). Figures are given for 2007 and 2016 (the latest available from eurostat). All figures are to base EU28 = 100.0 – lower figure = lower prices.
Table 1a: consumption goods 2007 (source: eurostat – code A00):
 Germany 100.0
 Netherlands 101.5
 Austria 103.9
 France 105.7
 Belgium 108.0
 Finland 115.0
 Sweden 117.6
 Switzerland 117.6
 Luxembourg 120.9
 Ireland 125.0
 U. Kingdom 127.3
 Denmark 135.2
 Norway 140.5
 Iceland 144.1
Table 1b: consumption goods 2016 (source: eurostat – code A00):
 Germany 103.4
 France 106.6
 Austria 110.8
 Belgium 110.9
 Netherlands 112.6
 U. Kingdom 121.7
 Finland 122.8
 Ireland 125.6
 Sweden 133.3
 Luxembourg 137.7
 Denmark 139.0
 Norway 149.5
 Iceland 151.4
 Switzerland 169.9
Table 2a: government services 2007 (source: eurostat – code A04)
 Sweden 111.3
 Germany 111.7
 Finland 115.7
 Austria 115.9
 Netherlands 116.6
 U. Kingdom 122.9
 Ireland 123.9
 Belgium 127.4
 France 127.4
 Switzerland 131.7
 Denmark 139.2
 Luxembourg 144.9
 Iceland 146.4
 Norway 153.0
Table 2b: government services 2016 (source: eurostat – code A04)
 U. Kingdom 110.6
 Austria 114.2
 Ireland 114.7
 Netherlands 119.9
 Germany 120.5
 Sweden 121.0
 Finland 122.5
 France 126.4
 Belgium 130.7
 Iceland 140.0
 Denmark 147.8
 Luxembourg 155.5
 Norway 160.7
 Switzerland 183.1
Table 3a: investment goods 2007 (source: eurostat – code A05)
 Belgium 100.6
 Luxembourg 103.3
 Ireland 105.0
 Switzerland 106.0
 Germany 107.9
 France 108.5
 Austria 110.5
 Netherlands 114.9
 Finland 115.0
 U. Kingdom 121.2
 Sweden 124.2
 Denmark 133.6
 Norway 141.6
 Iceland 143.8
Table 3b: investment goods 2016 (source: eurostat – code A05)
 Ireland 95.0
 U. Kingdom 98.1
 Belgium 100.4
 Luxembourg 103.8
 Austria 105.9
 Netherlands 107.4
 France 114.4
 Germany 117.3
 Denmark 125.2
 Finland 128.8
 Sweden 135.0
 Switzerland 140.8
 Norway 144.5
 Iceland 145.6
Table 4a: whole economy 2007 (source: eurostat – code 00)
 Germany 101.7
 Netherlands 104.5
 Austria 105.4
 Belgium 106.7
 France 107.9
 Luxembourg 111.9
 Switzerland 113.3
 Finland 113.5
 Ireland 116.3
 Sweden 116.5
 U. Kingdom 125.9
 Denmark 133.0
 Norway 135.2
 Iceland 148.8
Table 4b: whole economy 2007 (source: eurostat – code 00)
 Germany 106.4
 Austria 109.0
 Belgium 109.5
 France 109.9
 Netherlands 110.0
 Ireland 110.5
 U. Kingdom 115.7
 Luxembourg 120.0
 Finland 123.7
 Sweden 129.7
 Denmark 132.9
 Iceland 144.3
 Norway 147.6
 Switzerland 154.9
Taking all the figures into consideration, Ireland is not that high-cost. It ranks 6th lowest of the 14 for the whole economy. But, of the 5 lower-cost countries, 4 were only 1% lower-cost. For all categories Ireland showed an improvement between 2007 and 2006, confirming what the inflation figures above show. For the whole economy the gap between Ireland and the lowest-cost country, Germany, was cut from 14% to 4%. The relatively worse ranking for Ireland for consumption goods is largely due to very high taxes on alcohol and tobacco in Ireland. I neither drink nor smoke, but I can see that those who do may well feel aggrieved at such penal tax rates on these items. But, from the point of view of the whole economy, it may well be the case that having high taxes on unhealthy consumption items, while havng the lowest cost base for investment goods, may actually be beneficial to economic growth.
Teresa May isn’t really making too many decisions, it is utter chaos and emperor’s new clothes stuff in the conservative part at the moment. I did point out on here a year ago that with regard to Brexit, two years is a very long time in British politics.
That 10 year inflation list, (2007) reminds me of an old trick from unit trust marketing. Pick one of your funds that has been volatile and was underperforming and somewhere near a comparative low five years ago (because five years was the standard marketing benchmark at the time, no other reason) and then plaster the City with posters drawing attention to its performance (on the rebound) compared to its less volatile competitors.
A chart going back twenty years or more, so the run up in costs in the Irish economy up to 2007 is not filtered out by the start date, would be actually useful.
Thank you. But I doubt it will stop JtO spraying us with numbers that he has convinced himself somehow support his latest bit of prejudice or propaganda