Sunday 24 September 2017

REVEALED THE 'SECRET' CABINET PAPERS WHICH SHOW HOW ECONOMY WENT OFF A CLIFF

May 2008:

Brian Cowen appoints Brian Lenihan as his Finance Minister to much surprise.

June 2008:

Confidential government memo says tax shortfall emerging is about €3bn… Lenihan warns cuts of €2bn will be needed in Budget to keep Ireland under 3pc deficit limit. Memo warns: "Budgetary position has deteriorated considerably particularly in terms of tax revenue yield".

However, Lenihan and officials forecast growth of 3pc for 2008 and 2.7pc for 2009.

July 2008:

Lenihan announces spending cuts of €440m for 2008 and €1bn in 2009.

July - August 2008:

Cowen and his Government take summer holidays, despite turmoil in Irish banks and state coffers.

Sept 3, 2008:

Confidential memo for first Cabinet meeting after summer warns slowdown has continued but has "become more pronounced over the summer".

A €5bn shortfall is likely at this point. Belatedly, Lenihan realises earlier growth figures were wrong and situation is far worse than previously thought.

Incredibly, he still reckons the economy would grow by 1pc in 2009 and 3pc in 2010.

Sept 17, 2008:

In the space of just two weeks, the projected shortfall is now €6.5bn with the deficit set to be 5.5pc of GDP.

For the first time, Lenihan raises the prospect of "recession", the memo states: "Economic data in recent weeks has been very poor."

Growth forecasts for 2009 cut again, but Lenihan says economy will grow by .5pc.

Unemployment was forecast to rise to 6.8pc but then fall again in 2010. Budget is brought forward to October.

Sept 28, 2008:

Emergency meeting on Sunday told economic growth in 2008 will be negative (-1.5pc).

Lenihan says there will be zero growth in 2009 "but risks to this are to the downside".

€6.5bn tax shortfall likely to grow further as "figures are very weak in recent weeks". Suggestion of €2bn in tax increases included in memo.

Monday, Sept 29, 2008:

While the economy burned, Lenihan and Cowen distracted by bank crisis and introduce €440bn blanket bank guarantee.

Oct 14, 2008

Memo to ministers on Budget Day says: "Ireland's deficit level is very high and not sustainable over medium term".

Lenihan announces "most austere Budget" for a generation with €2bn in tax increases.

April 2009

Lenihan forced to introduce an emergency Budget due to the scale of the crisis. Spending cuts and tax increases totalling €5.1bn.

December 2009

Ultimately, it emerges that the economy shrinks by 10pc in 2009.

MEMO

budgetary position has deteriorated considerably particularly in terms of tax revenue yield

 

Economic data ... very poor

forecast

+3pc

forecast

+1pc

-1.5pc

forecast

 

SHORTFALL

€3bn

SHORTFALL

€5bn

SHORTFALL

€6.5bn

MEMO

deficit level is very high and not sustainable over medium term

 

Sunday Independent

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