Today, the Bank published its fourth quarterly bulletin of the year (Quarterly Bulletin (QB4 – October 2018), containing new projections to 2020.
The economy continues to grow at a robust pace and momentum has picked up since our last set of published forecasts (July). Economic activity remains underpinned by robust and broad based growth in employment and incomes. In turn, underlying domestic spending has gained further momentum reflecting strong consumption and (underlying) investment expenditures. Overall, we see underlying domestic demand growing by 5.6 per cent this year, before moderating to 4.2 per cent in 2019 and 3.6 per cent in 2020. In GDP terms, we expect growth of 6.7 per cent this year, 4.8 per cent in 2019 and 3.7 per cent in 2020. The labour market continues to move towards full employment with the headline unemployment rate expected to be below 5 per cent in 2019 and 2020.
While the outlook remains favourable, a number of significant downside risks remain. On the domestic side, the main vulnerabilities relate to the cyclical strength of the recovery. On the external side, risks centre on Brexit and any further disruptive changes to international tax and trading regimes given the openness of the Irish economy.
Aside from the normal outlook and commentary, the Bulletin contains a number of Boxes highlighting research on some key issues. These include pieces on Brexit, the international economy and risks relating to Corporation Tax flows. The Bulletin also contains a chapter on financing developments in the economy and a signed article examining financial risks and buffers in the Central Bank.
- Macroeconomic Implications of the UK Government Brexit White Paper: A Preliminary Analysis (Box A – page 13)
- International economic outlook (Box B – page 17)
- Risk related to Corporation Tax Flows (Box C – page 33)
On the financing side of the economy, there are pieces on:
- Income Statement Statistics and Ireland’s Banking System (Box A – page 48)
- Retrocession: Reinsuring the Reinsurer (Box B – page 52).
The Bulletin includes a signed article by Doran, Gleeson, Kilkenny and Ramanauskas (2018), on “Assessing the Financial Risks and Buffers of the Central Bank.”
The Bank released its third quarterly bulletin of the year this week (Quarterly Bulletin (QB3 – July 2018). The outlook for growth remains favourable despite significant downside risks. The economy is expected to grow (in GDP terms) by 4.5 per cent this year and by 4.2 per cent in 2019. Most of the impetus to growth is likely to continue coming from domestic sources with the unemployment rate averaging 4.8 per cent next year on the back of solid and sustained gains in employment.
A number of significant downside risks remain. These predominantly relate to the vulnerability of the economy to external shocks, namely Brexit, further increases in protectionist trade policies and any changes to international tax regimes (that could affect FDI flows). Domestically, while inflationary pressures remain contained, the gradual erosion of spare capacity increases the prospects of overheating. In particular, in the labour market, unemployment is fast approaching levels that in the past have triggered an acceleration in wage inflation.
Aside from the normal outlook for the economy, the Bulletin contains a number of Boxes on a diverse range of topics. These include pieces on the National Accounts, a new economic indicator, trade, inflation, credit and debit card returns and mortgage arrears. The Bulletin also has a signed article that looks at Irish Government investment, financing and the capital stock.
- International economic outlook (Box A – page 13)
- Revisions to the CSO National Accounts (Box B – page 15)
- A new monthly indicator of economic activity (Box C – page 21)
- Irish exports and world demand (Box D – page 29)
- Consumer prices in Ireland (Box E – page 38)
On the financing side of the economy, there are pieces on:
- Credit and Debit Card Return (Box A – page 51)
- Mortgage Arrears Statistics (Box B – page 59).
The Bulletin includes a signed article by Hickey, Lozej and Smyth (2018), on “Irish Government Investment, Financing and the Public Capital Stock”
This morning Revenue published our Annual Report for 2017. The report contains lots of information on Revenue’s activities and outputs last year that contributed to the collection of €50.8 billion in net receipts for the Exchequer, as well as delivering on service to support compliance, the implementation of customs controls and facilitation of trade.
Also published today are a series of research papers that may interest readers of this blog:
Updated Corporation Tax research profiles tax payments received in 2017 as well as analysis of 2016 tax returns. This includes significant new analysis of multinational companies in Ireland.
An analysis of Income Dynamics and Mobility based on Revenue micro data. This examines the distribution of incomes by decile and percentile as well as tracking mobility of income earners over time.
Profiles of Excise Duty and Capital Taxes receipts. Excise, Capital Acquisitions Tax , Stamp Duty, Capital Gains Tax and Local Property Tax cover wide ranging activities, transactions and products. The profiles document these in detail and show changes in core components in recent years. For the first time, information on capital taxes are combined together with location and earnings data to present new perspectives on the taxes.
Revenue’s latest customer survey, of small to medium sized enterprises in 2017, is Revenue’s fourth SME survey. Responses show that customer satisfaction with Revenue service remains high across a range of headings. The survey also includes a behavioural experiment to test the impact of personalisation on response rates.
Also published is the annual illegal tobacco survey results for 2017 and the first quarterly Local Property Tax statistics for 2018.
The presentation of the 2017 Miriam Hederman O’Brien prize awarded by the Foundation for Fiscal Studies will take place on the Monday 2nd October from 8:00 -9:30am in the Grafton Suite, The Westbury Hotel, Dublin 2.
The aim of the prize is to recognise outstanding original work from new contributors in the area of Irish fiscal policy, to promote the study and discussion of matters relating to fiscal, economic and social policy and to reward those who demonstrate exceptional research promise. The prize forms an important part of the Foundation’s overall objective of promoting more widely the study and discussion of matters relating to fiscal, economic and social policy.
The shortlisted papers are shown here and past winners here.
There will be tea / coffee from 8.00 as well as an opportunity to view stands promoting some of the work and applications nominated for the Award.
The event is free but please register in advance to email@example.com.
Readers may have seen that the Low Pay Commission recently published their report Recommendations on the National Minimum Wage for 2018.
Perhaps of most interest to readers of this blog are the detailed appendices, which include a study by Revenue and Irish Government Economic & Evaluation Service (IGEES) economists Seán Kennedy, Brian Stanley and Gerry McGuinness of the low pay sectors based on tax return microdata. This paper is also separately available here.
The paper examines the incomes and mobility of taxpayers and the profitability of employers in Ireland using Revenue’s tax record data. The distributional and mobility analysis of low income taxpayers is based on a longitudinal dataset, which follows approximately 100,000 taxpayers for 4 years from 2011 to 2014. These taxpayers are stratified random sample drawn from the entire population of 2.1 million tax units on Revenue records. While analysis of incomes in Ireland and internationally is often based on a snapshot at a moment in time, the longitudinal nature of this dataset allows measurement of income mobility over time.
Some of the key findings are as follows:
- One in three taxpayers are low paid, defined as those earning below two-thirds of median income.
- The highest proportions of low paid taxpayers are in the wholesale & retail trade (23 per cent) and accommodation & food (19 per cent) sectors.
- Five low pay sectors are identified, having median incomes that are substantially below the median income for all sectors. They include accommodation & food service activities, wholesale & retail trade and administrative & support service activities. Slightly over one third of employments are in low pay sectors.
- Low pay sectors have the highest proportions of the youngest taxpayers. Two in five taxpayers are aged 24 and under in the accommodation & food sector.
- In the low pay sectors, males earn slightly more than females while in the other sectors females earn more. The sectors with the highest ratio of males to females are construction, transport and agriculture (7.5, 2.9 and 2.8 times respectively).
- In Dublin, median incomes in low pay sectors incomes are 7 per cent higher than those outside Dublin (compared to 9 per cent higher in the other sectors).
Based on an analysis of income mobility, lower paid taxpayers working in low paid sectors have a higher chance of increasing their incomes in future years relative to others within the same sector. For example, in the accommodation & food sector almost half moved upwards from the bottom quintile between 2013 and 2014.
The Irish Government Economic & Evaluation Service (IGEES) recently published a summary of papers and other outputs by IGEES economists. This showcases the papers that have been published on the IGEES website from January to December of 2016. While this is not an exhaustive list of the work that IGEES staff undertake, it does show the varied and detailed work that IGEES staff carryout throughout the year.
The summary is available here.
In 1909 Tom Kettle was appointed the first Professor of the National Economics of Ireland at University College, Dublin.
He was in Belgium running arms for the National Volunteers when the war broke out in 1914. What he perceived as the barbaric Prussian assault on European civilization prompted him to apply for a commission with the Royal Dublin Fusiliers, which he was awarded in 1916.
He was killed in action at Ginchy (Picardy) during the Battle of the Somme on 9th September 1916.
In the spring of 2006 the late Gerry Barry, the RTÉ broadcaster, organized a public meeting (in the former House of Lords chamber at College Green) to mark the 90th anniversary of Kettle’s death. He asked me to contribute a piece on Kettle’s work as an economist.
Ten years on, and a century after Kettle’s death, I thought readers might be interested in the brief essay I wrote for the occasion.
More details of his life are available in the excellent Wikipedia article on him:https://en.wikipedia.org/wiki/Tom_Kettle.