Business Irish

Saturday 21 April 2018

Irish deficit widened on 'one-off' Anglo impact

Simone Meier and Louisa Fahy

The Government said that its larger-than-estimated budget deficit in 2009 stemmed from a "one-off impact" related to its €4bn injection into Anglo Irish Bank.

The European Union today said that Ireland’s budget shortfall widened to 14.3pc of gross domestic product last year after forecasting a shortfall of 12.5pc in November.

The gap was 7.3pc in 2008. That’s the biggest deficit among the 16 euro member states and more than four times the EU’s 3pc deficit limit of GDP.

“This is a once-off impact,” Finance Minister Brian Lenihan said in an emailed statement today. It “will not affect the Government’s stated budgetary aim of reducing the deficit to below 3pc of GDP by 2014.”

Lenihan last year nationalised Anglo and pumped €7bn into Allied Irish Banks and Bank of Ireland, the country’s two biggest lenders. The Government said last month that Anglo may need €18.3bn in additional capital.

The total gross cost of the bailout, including the purchases by the agency, may amount to about €73bn, the Economic and Social Research Institute said on April 13.

“I don’t think the news is shock horror,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. Still, “it doesn’t make us look any better.”

Ireland’s debt increased to 64pc of GDP last year from 43.9pc in 2008, the statistics office said.

In the euro area, the budget deficit widened to 6.3pc of GDP last year, the biggest since the introduction of the euro in 1999, from 2pc in 2008. Overall debt was at 78.7pc.


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