We should heed masters of the dismal science who urge benefits of prudence
Small countries exposed to the vagaries of external events have only a handful of effective instruments to moderate economic fluctuations. These used...
Small countries exposed to the vagaries of external events have only a handful of effective instruments to moderate economic fluctuations. These used...
If the Government persists in encouraging the switch to electric cars they will need to move beyond aspirational targets - they will have to get serious about the manner in which motoring is...
Thursday's announcement that the Government plans to spend €1bn on flood defence over the next decade follows a comprehensive assessment by...
The Brexit debate in the British media and the House of Commons this last week has been confusing, particularly the stuff about solving the Irish border problem through UK willingness to...
Despite the sharp increase in prices and rents these last few years, housing remains affordable in most parts of the country. Most Irish people with a steady job can afford to rent accommodation and can at least aspire to home ownership.
Five straight years of economic recovery and the slow restoration of financial stability cannot forestall the inevitable query: "They are not going to blow it again, are they?"
Last Thursday saw the release by the National Transport Authority (NTA) of the preferred routing for the next addition to the Dublin tram system, formerly called Metro North and re-christened MetroLink. This will be an expansion of capacity on the existing Green line from Sandyford in the south of the city and a new line, much of it underground, through the city centre and on...
For the last two weeks, the UK government's bandwidth has been absorbed fully in the spat with Russia over the poisoning of two people in Salisbury. But the meeting this Thursday and Friday of the European Council, as soon as Theresa May has departed, must decide on rather more consequential matters: whether to adopt the Commission's draft of the withdrawal agreement and how to...
Ireland's agenda with the European Union is getting complicated. After five years of strong recovery, the country's economic prospects are exposed to developments in EU policy under three headings. There will be profound effects from Brexit about efforts to harmonise corporation tax and about future governance of the eurozone. And the next slowdown, whenever it comes, will see...
Theresa May's peroration in London last Friday was her fourth major speech on Brexit since she assumed the office of prime minister in July 2016.
The biggest single project in the National Development Plan released last Friday is a new tram line for Dublin, formerly called Metro North and re-christened Metro Link. This will be a Luas line, not a full-gauge railway, from Swords into the city.
Britain's negotiations on withdrawal from the European Union are taking place not in Brussels but inside the Tory party in London. These talks need to conclude fairly quickly or there will be a...
Communications minister Denis Naughten shrugged off last Thursday's news that Eir, the former State-owned telecoms monopoly, had withdrawn from...
Leo Varadkar's speech last Wednesday at the European Parliament gave brief mention to two issues, aside from the Northern Ireland border, which are big risks in Ireland's relations with the post-Brexit European Union. These are the reform of the eurozone and harmonisation of corporate tax.
Proposals from the Central Bank last week that company law and regulators' powers should be expanded to include tailor-made sanctions for managers of failing banks need some justification. Why pick on banks? Do not the market, and the universal sanctions of the corporate code, contain sufficient penalties for errant executives?
With unemployment rates continuing to fall across the country, household incomes recovering and Brexit-related problems despatched to the long grass for a while, political attention will refocus on domestic policy failures.
Writing in these pages before Christmas, Leo Varadkar expressed the view that Ireland's natural home was in the European Union. He wrote: "Over the past few weeks the support we received from the EU negotiators and fellow Heads of State and Government was invaluable and was the clearest possible illustration of the values of the European Union, and why small countries are better off in a big union. It puts beyond any doubt that our future lies in the European Union at the heart of the common European home that we helped to build."
Britain's Cabinet is due to meet this week, 18 months after the referendum, to agree its desired end-point in the Brexit process. The country, and its European neighbours, have been through several years of economic uncertainty and diplomatic turmoil initiated by a group of people who have yet to agree the purpose of the exercise.
If you are out of work, grew up on a dairy farm and fancy a career in journalism, there could be an opening at the Daily Telegraph in London.
'What the hell does your government think it's doing?" a former Conservative minister asked the Irish Times' London correspondent, Denis Staunton, last week. "Do they not know the pressure she'll come under to just walk away?"
Decisions about capital investment matter greatly for the long-run performance of the economy and two reports released last week should remind Irish policymakers that mistakes can be costly.
There should be no Schadenfreude, joy in another's misfortune, anywhere in Europe, especially in Ireland, about the descent into dysfunction in Westminster. The Brexit process cannot be managed solely from Brussels, it must also be managed by a united and focused government in London. The week's events must be driving Britain's European counterparts to distraction.
When empires, the prisons of nations, collapse, their suppressed constituents invariably set up shop as new independent states. So it was with the collapse of the Soviet Union almost 30 years ago and with the demise of the Ottoman and Hapsburg empires at the end of World War I.
The fifth straight year of economic expansion, and with labour market conditions already tightening, there was no case for an expansionary budget and every reason to target a modest surplus in 2018.
PASCHAL Donohoe’s first budget next Tuesday week will see only minor changes in taxes and expenditure.
Sixteen months on from the referendum decision, and six months since the Article 50 resignation letter, Theresa May chose to put the preservation, for now, of Tory party unity ahead of any other consideration in her Florence speech last Friday. Britain will not be pursuing a damage-limitation strategy in dealing with Brexit, but the Conservative party will hold together for another while.
Irish policymakers are understandably alarmed about the worsening economic environment created by Britain's likely departure from the EU's single market and customs union, but there could be equally troublesome changes coming in the structure and operation of the Eurozone.
David Cameron drafted alternative speeches as he awaited the result of last year's fateful and too-close-to-call referendum. Outside 10 Downing Street on the morning following the narrow rejection of EU membership, he chose Document No 2. It said, more or less, "Oops, sorry, I'm out of here".
Choices made by Theresa May's government subsequent to the Brexit referendum, and not necessary to comply with the electorate's decision to quit the EU, are at the heart of the continuing stand-off with Brussels.
It was never going to be easy to secure a frictionless border in Ireland once the UK exited the European Union. The land borders of a highly integrated market for goods, labour and capital cannot be frictionless unless it shares reciprocal rules of access, tantamount to membership, with its neighbours.
Ireland's return to levels of economic activity not seen since the credit bubble began to burst 10 years ago is not the only "lost decade" that deserves notice this summer. A decade has also been lost in reforming Europe's dysfunctional common currency regime and the same air of premature celebration is taking hold. Just as there is no guarantee of plain sailing for the Irish economy, critical weaknesses in the common currency design remain unaddressed.
Leo Varadkar's speech at Queen's University last Friday reflected (politely) his judgment that the British political leadership has wasted 14 months since the referendum in dodging the key challenges in implementing Brexit. The continuing retreat from reality saw foreign secretary Boris Johnson in New Zealand last week and the trade secretary Liam Fox in Argentina, exploring post-Brexit trade deals (aboard, metaphorically, the good ship Global Britain) to replace what will inevitably be lost in Europe.
Each summer, the Tax Strategy Group - a committee of officials from Finance, the Revenue Commissioners and other departments of central government - releases a report on possible changes in tax policy. The group's 2017 report will be released tomorrow in advance of the 2018 budget, which is due in October.
The Dail recess commenced last Friday - the annual signal for the abandonment of serious politics until the autumn.
Last Thursday, the Cabinet met to consider the state of the economy in advance of a formal review to be published later this month. The purpose is to usher in the pre-budget speculation season, on which large volumes of ink must be spilled over the next three months.
Friday's report from Daft.ie, urging changes in the regulation of the housing market to counter the latest jump in prices, should have come as no surprise at RTE's sprawling Donnybrook campus in leafy Dublin 4. The State broadcaster has just concluded a deal to sell an 8.6-acre portion of the site, which is 6km from the city centre, for the astonishing figure of €108m, without planning permission.
The Tory party, described by one-time leader William Hague as "an absolute monarchy tempered by periodic resort to regicide", has in a short few years delivered the United Kingdom into a dreadful strategic cul-de-sac.
Reports released last week confirm something which looks like a house price bubble. It is not, or not yet, a bubble driven by excessive growth in bank credit like the last time round. But nor is it a nationwide crisis in housing affordability.
Leo Varadkar's first task in government will be to prevent, insofar as he can, an early train-wreck in the UK's negotiations with the EU-27. Brexit represents, in the words of Bob Geldof, the 'greatest act of self-harm in British history'.
Economic recovery these last few years, combined with very low interest costs on new government borrowing, has brought the budget deficit down sharply. But Brexit threatens the economic outlook and the European Central Bank will likely commence raising interest rates back up to normal from 2018 onwards.
There is no budgetary scope for a fresh public service pay round, in addition to the increases in public pay already promised under the Lansdowne Road agreement and subsequent concessions to gardai and others.
A poor Brexit deal for Britain is a bad outcome, but not just for Britain. The UK election a month hence will install a new Conservative government which has already boxed itself into a poor-deal strategy, damaging for Britain, damaging for members of the European Union but especially for Ireland. No country, other than the UK itself, has more to lose.
All the main political parties in Ireland were, until quite recently, in favour of a State-owned national utility to run the water industry, financed mainly through user charges.
Theresa May's resignation letter to Donald Tusk last Wednesday and his response on behalf of the European Council last Friday made explicit and prominent reference to exclusively Irish concerns in the upcoming Brexit negotiations, as did Guy Verhofstadt, who will represent the European Parliament when it comes to approval of the deal. Michel Barnier, the European Commission's chief negotiator, is on the record to the same effect. That all negotiating parties, British and European, have endorsed the principal concerns of the Irish Government, and in similar language, is a...
RTE has just announced a reduction in staff numbers of 10- 15pc - the total staff is almost 2,000, so around 250 jobs will go. Management hope that retirements and voluntary severance will do the trick, without compulsory redundancies, and have embarked on consultation with unions.
The British government secured House of Commons support for its Article 50 notification bill, subsequently approved by the Lords and given the royal assent, on Monday last. On the same day, the Scottish first minister, Nicola Sturgeon, called for a fresh referendum on independence from the United Kingdom.
The mainstream European media have been venting about the rise of a new populism, concerned that far-right anti-EU parties will do well in elections in the Netherlands this week, in France in April and May, and later on in Italy. But they are downplaying an important political truth: populism is as old as the hills, nothing new anywhere in Europe, Ireland included.
While the suspension of strike notice at Bus Eireann and the resumption of talks between unions and management may result in some form of interim settlement, the underlying problems at the company, and more broadly in the CIE bus and rail business, are not being addressed. Demand for intercity public transport is in decline and the costs of meeting this demand through the CIE model are excessive. The minister has wisely kept away from the talks, keeping the taxpayers' chequebook out of danger for now. But the taxpayer remains on the hook for a system of public transport...
Concerns about the Border with Northern Ireland are consuming much of the political attention being devoted to Brexit. But Great Britain is also leaving the European Union. For the Republic's economy, the Great Britain bit is much more important than the Northern Ireland bit.
Ireland's exposure to Brexit involves more than keeping the border open, important though that certainly is. The fate of the British economy and its future trading relations with the EU remain entirely unresolved and managing the land frontier could turn out to be the lesser challenge. The explicit inclusion, at number four, of the land border issue in the UK government's 12 priorities for the negotiations is reassuring.
When she took office last July, Theresa May had little choice but to opt out of the EU's single market. With Tuesday's speech at Lancaster House in London, she despatched any practical prospect that the UK can remain in the customs union either. She may have been, as some critics allege, a closet Brexiteer all along, but the more charitable explanation is that she is a student of Talleyrand.
When Ken Whitaker was appointed to lead the Department of Finance in 1956, the Irish economy had been through a period of persistent failure.
There is quite a spat under way about the possible location in Dublin's docklands of a new film studio, promoted by a former chairman of the Film Board and a group of film industry operators. They have their eye on some State-owned land, possibly land belonging to Dublin Port or alternatively part of the storied Irish Glass Bottle site which ended up in Nama. The chief executive of Dublin Port has accused the promoters of a 'land grab' no less, while they claim to be offering jobs, economic growth and all things good and wholesome.
Last week's spat in London between the civil servants and the hard Brexiteers needs to be seen in context. If the UK ends up outside the EU's single market, and outside its customs union, there will be dramatic and potentially very damaging consequences for external trade, unless a successor deal on trade access can be negotiated.
The Brexit decision and Trump's presidential victory have inspired some apocalyptic year-end commentaries. In the more extreme versions, the EU will break up; Trump will start a trade war with China; and the end of the year morphs into the end of the world.
Despite inadequate design and misguided management, Europe's common currency has survived eight years of severe economic downturn, and survived better than support for its designers, the traditional political parties in the EU's founding member states.
When a policy problem gets too big to solve, the policymakers can sometimes avoid, or at least postpone, the admission of failure and the need for reform.
Brexit and the election of Donald Trump to the US presidency, the two big political surprises of 2016, are both negative in their economic implications for Ireland. Some additional clues as to just how negative emerged last week.
Trump's victory is the second political surprise of 2016 with negative consequences for Ireland, following the UK's Brexit decision at the end of June. There could be further negative surprises from European electorates in 2017.
Ireland's economic management is caught in a trap, exposed to a fiscal paradox that is barely visible. Despite heavy debt, the Government can borrow freely at low interest rates - lower than they were when the public finances were far healthier - courtesy of the easy money policy pursued by central banks.
Political decision-making in democracies has a bias towards the short term: decision-makers are temporary hires and will not be around to reap what they sow. Electorates seem almost to prefer their political leaders employed on short contracts. In good times this may not matter too much: politics reduces to the distribution of any available gains from economic growth. But when...
The Government's plan to re-introduce the first-time buyers' grant has received a cool response from housing experts. They think it will encourage demand rather than supply and will facilitate a bidding-up of prices by purchasers.
The latest leg of the long-running eurozone banking crisis is playing out - not in Greece or in Italy, but in Germany, home to the headquarters of Deutsche Bank, whose share price has collapsed and which may shortly require support from the authorities. Comparisons are being made with the failure of Lehman Brothers on September 15, 2008, which triggered the freeze-up of world financial...
The UK Government is likely to trigger Article 50 of the Lisbon Treaty sooner than had been expected, in the first months of 2017, according to last Thursday's remarks from Foreign Secretary Boris Johnson. EU Council President Donald Tusk indicated last week that this was also Theresa May's timetable, only to be corrected by the UK prime minister. The Three Brexiteers in the UK Cabinet (Johnson, Liam Fox and David Davis) have been jointly charged with executing Brexit. While the division of responsibilities is unclear, all three appear to contemplate not just an accelerated...
Nama was established in late 2009 to buy property-related loans from Ireland's bust banks at a discount. The intention was that the assets be warehoused and fed gently into the market, avoiding a chaotic fire sale.
The Brexit decision damages the context of Ireland's international relations and in ways not all of which will be clarified quickly. The 27 European Union leaders meet in Bratislava on Friday, the full roster minus the British.
In 1935 Albert Einstein and two co-authors published an article in an academic journal called the Physical Review about the problem of quantum superposition, the idea that a subatomic particle exists in a combination of several alternative states. The act of observation affects the particle making it select just one of these states. The Austrian physicist Erwin Schrodinger concocted a thought experiment to illustrate the point. A cat is enclosed in a lead box with a device which might or might not have released a fatal dose. When the box is opened, the cat will prove to be either...
The 2017 Budget will be introduced on October 11, which is just six weeks away. Documents released recently by the Department of Finance suggest that the Government will be able to further reduce the budget deficit while providing for spending increases and tax reliefs. There is some fiscal space, in other words. Lobby groups and political parties are returning from the holidays and the...
The demonstrations in Brazil against the Olympic Games are hardly a surprise. Just two years ago, the World Cup provoked outrage in the same country at the colossal waste on white elephant stadiums in cities where there are no top-flight football teams. There has been no subsequent use for several of these venues, which were constructed with public funds and much corruption.
The Government's new housing plan has received a cautious welcome at best. There are good reasons for caution.
The Irish economy, on all credible indicators, grew by about 5pc last year. The GDP growth rate could even have been a little higher. But it could not have been 26.3pc, the amazing figure computed by the Central Statistics Office.
The acute phase of the eurozone sovereign debt crisis in 2012 was triggered in Italy, not in Greece or one of the other small peripheral economies. The European Central Bank eventually took action - an Italian collapse would have threatened the survival of the common currency - and crisis was deferred. But the eurozone banking system has not been fixed, and the extend-and-pretend tactic is facing another challenge. UK Prime Minister David Cameron's referendum gamble has not merely come unstuck, it has gone wrong at the wrong time.
It is no longer imaginable that Britain's Conservative party will risk further political dislocation by ignoring the popular vote and seeking an escape from the unexpected Brexit decision. This prospect disappeared with the demise of Boris Johnson's leadership campaign last Thursday.
The decision to take Britain out of the European Union hurts Ireland's economic prospects and some more air has escaped from the fiscal-space balloon. The departure threatens the survival of two unions, the EU and the United Kingdom itself, and the negative reaction in financial markets has not been overdone.
Unaffordable housing is largely confined to the Dublin area. Figures from Daft.ie reveal that rents in central areas of Dublin are (at least) double those in the provincial cities.
The 200-page draft report of the Oireachtas Committee on Housing and Homelessness is due to be finalised over the coming weeks, and its recommendations will be influential. The dysfunction in the system of housing supply and in the market for housing finance was at the heart of the banking collapse, and the sector's failings are complex and of long standing.
Ireland has long had a two-tier pension system to go with the two-tier health service. Some groups of employees are covered by decent occupational pension arrangements but many are not. Those who work in favoured sectors of the economy are fortunate, notably permanent employees in banks and in the public service, but there are very wide variations and many workers in the broader economy have little or no entitlement to income from an occupational scheme.
The economic recovery in Ireland continues to reduce unemployment at a rapid pace. Figures from the Central Statistics Office last week show that the overall unemployment rate has fallen below 8pc and has halved in just four years. The numbers are from the Quarterly National Household Survey (QNHS), a very large-scale data-gathering exercise and one of the best tools for monitoring economic trends.
The formation of the new Government has avoided, according to Friday's Red C poll, a second general election which would have produced another hung Dail and little change from February's result. There would have been some form of minority government anyway.
Ten long weeks of government formation have produced an enormous list of concessions on public spending. The Independent deputies must feel they have been negotiating with the Make-a-Wish Foundation. A rough costing (remarkably there is none in the documents that have been released) puts the bill at €3bn in annual cost and leaves the State's finances ever more exposed to whatever problems are coming down the track. The problems in Europe, including the risk of Brexit and the continuing travails of the common currency, are not the only ones. The biggest threat to long-...
Generations of neglect has taken its toll on Ireland's water supply and waste water disposal systems. The result is cryptosporidium, boil notices, service interruptions, dangerous levels of E. coli, high leakage rates, a looming supply crunch in the Dublin area, pollution of inland water bodies, untreated sewage discharged off coasts and high operating costs.
The water issue is not the key challenge facing politicians. The infant recovery is fragile and the next government will need to focus quickly on more urgent domestic and external threats. Irish business is losing its competitive edge again, according to last week's report from the National Competitiveness Council. Public service trade unions are gearing up for another pay round, beyond the deal agreed at Haddington Road, which was supposed to run to 2018.
There is another house price bubble under way in the Dublin area. Notwithstanding the efforts by the Central Bank to keep mortgage credit under control, some extraordinary prices have been quoted recently for the small parcels of land that become available.
The fiscal space balloon has been losing altitude since its release during the election and the Exchequer figures for the first quarter bring it even closer to earth. There was another big overshoot on the health budget and the earnest discussions in Government Buildings are about schemes to dispense largesse which does not exist.
There is no national housing crisis. In most parts of the country second-hand homes are for sale at prices that are affordable and below the cost of construction. The deposit required under Central Bank rules in these areas is no more than the price of a small car. Rents are also modest in most counties and there is little need for new construction.
The European Central Bank is running out of ammunition. Last Thursday's announcements of further monetary policy moves are an attempt to boost the sluggish economy and the inflation rate, which remains close to zero. There are widespread doubts that the latest measures will have the desired impact.
The latest stand-off over Irish Water is lamentable. If the supply of electricity in Ireland was in the hands of local authorities, with no national grid and no centralised planning, some bright spark would suggest that a single state monopoly be established, led by engineers rather than politicians, to bring order to the mess. And this is precisely what happened, all of 90 years ago.
For a government elected in 2011 to stabilise the economy and avert bankruptcy, the commitment to tax cuts and spending increases served only to validate the Contest of Promises from everybody else.
The negotiations concluded yesterday in Brussels may have equipped David Cameron with enough concessions to claim that the European Union has reformed and that the UK electorate should back continued membership.
How about this for a policy achievement: over-provide finance for houses, over-produce houses, bring down the banks and the country to its knees and end up with, would you believe, a shortage of houses.
The early days of the election campaign have been dominated by controversy about something called 'fiscal space' which must have had voters scratching their heads. What is this apparently precious commodity, and how large is Ireland's newly-discovered endowment? The phrase is borrowed from the vocabulary of debt sustainability analysis and rarely escapes the statistical appendices of IMF reports. It is a little unfair to inflict this unfamiliar piece of jargon on a blameless electorate.
The Irish banking bubble had been a decade in the making when it began to deflate almost eight years ago. In what had been a cautious and conservative banking system, every single bank went wallop and all required guarantees and capital injections.
A small trading economy, and Ireland fits the description, cannot escape when things take a nosedive internationally. There are growing fears that this is happening, with agencies like the European Commission, the IMF and the OECD revising their economic forecasts downwards.
When the economy entered recession in the final quarter of 2007, the budget was in surplus: indeed a surplus had been recorded for nine of the preceding ten years. Public debt was just 25pc of GDP, amongst the healthiest figures of any developed country. But the international downturn, accentuated by the domestic banking bust, was so severe that large tax increases and spending cuts ensued and a pro-cyclical adjustment, deepening the downturn, had to be pursued until 2014 when the austerity phase could finally be relaxed.
It is impossible not to feel sympathy for homeowners affected by the unprecedented flooding around the country. But there should be less sympathy for the dam-burst of instant political reactions. Sinn Fein leader Gerry Adams was even driven to condemn as "insulting" the whistle-stop tours of flooded areas by politicians. He was speaking in Limerick during his whistle-stop tour of flooded areas.
After just two years of recovery from the worst downturn since the Second World War, and the near-insolvency of the State, the general election is descending into a Contest of Promises.
The UN climate summit which ended yesterday in Paris was the 21st devoted to the search for agreement on how to limit global warming. The first was in Berlin in 1995 and the annual get-together now attracts 195 participating countries and 25,000 delegates.
The stream of good economic news in Ireland shows no signs of letting up. The budget deficit for 2015 will come in under target, due mainly to healthy growth in tax revenues, while unemployment continues to fall. But the external developments which have fuelled the turnaround are not guaranteed to last. When things improve so quickly it is foolish to extrapolate: the good times could roll a little longer but they will not roll forever.
The life of the 31st Dail is coming to a close and it is time to consider the issues which should preoccupy its successor. First among them should be the identification of policies to ensure steady economic progress in the years ahead without courting any more boom/bust cycles.
The collective unpopularity of the three mainstream Irish political parties gets harder to explain. Recent opinion polls show Fianna Fail, Fine Gael and Labour commanding the allegiance of around 55pc of the electorate between them.
ECB President Mario Draghi made his fourth and final visit for 2015 last Thursday to the European Parliament's economic and monetary committee, the only form of democratic accountability to which the ECB has chosen to submit itself. The ECB has refused to attend at the Oireachtas Banking Inquiry, even though there is nothing in the ECB statute to prevent its officials from making themselves...
Bank crashes large enough to inflict substantial damage on taxpayers require failures at three levels. The boards and managements of banks need to incur large losses on dud loans. The regulators and supervisors need to miss what is going on, and to neglect timely remedial action. Finally, the Government needs to socialise a large portion of the losses, imposing them on taxpayers. That third failure, particularly the very broad state guarantee of bank liabilities, has dominated blame allocation in Ireland, but there is less information in the public domain on failures elsewhere.
At the end of September, Dublin prices for residential properties had increased by just over 5pc on the January figure.
Patrick Honohan will be leaving the Central Bank in December in considerably better condition than it was back in September 2009 when he arrived in Dame Street. He has had to devote much of his term as Central Bank governor to firefighting. The fires may not be decisively extinguished but the reputation of the Bank has been restored. His successor, Philip Lane, will wish to do more than consolidate what has been achieved.
'When you come to a fork in the road, take it' was the advice of the New York Yankees baseball legend Yogi Berra, who passed away three weeks ago. The Taoiseach used the 'fork in the road' metaphor to characterise the Government's Budget strategy in his Dail address on Wednesday, shortly after Fiscal Council chairman Prof John McHale had made it plain that the fork chosen was the wrong one. The Budget was needlessly expansionary for the second year in a row and the Government is trying to spend its way out of a boom.
Tuesday's budget will see roughly €1.5 billion distributed between tax reductions and spending increases. All of this money is being borrowed: the economic recovery has improved the public finances but the budget remains in deficit. Had the government opted to make no changes for 2016 the deficit would have continued its decline and might have been close to zero next year. The attainment of a zero deficit and an end to the accumulation of debt is being deferred.
During the bubble, State expenditure rose dramatically, and under virtually all headings. A major beneficiary was the State capital programme, and it became a major casualty when government revenue collapsed in 2008. This is a familiar pattern. When the public finances last got into trouble in the late 1980s, the correction saw a much bigger cut in capital than in current spending and public investment has again been cut severely this time round.
The resignation on Wednesday of Volkswagen chief executive Martin Winterkorn followed revelations that the company had been fiddling emission tests on diesel cars in the United States, provoking the threat of large fines by US regulators and a collapse in the share price. Volkswagen is, with Japan's Toyota and General Motors of the US, one of the world's big three automakers, with annual sales that exceed Ireland's GDP.
Ireland's two-year bank guarantee introduced at the end of September 2008 was meant to cost nothing at all. The banks were solvent, people were assured. They were just temporarily short of liquidity due to some incomprehensible snafu at banks in New York. This was not credible at the time and was not widely believed. Every single domestic bank duly went down in one of the biggest bank busts ever recorded anywhere. Through 2009 and into 2010, the Government scrambled to keep the system functioning, principally through injecting vast quantities of taxpayer's cash. Meanwhile,...
The public finance figures announced last Wednesday show, on the face of it, an improving picture. Tax revenues are ahead of expectations, government spending is apparently contained and the budget deficit is below the target. But the persistence of any deficit at all, after seven years of fiscal correction, means that government debt continues to rise. Any country with debt over 100pc of GDP and lacking a national currency is vulnerable should there be another leg to the international financial turmoil. Small indebted countries in the eurozone will, on past experience, be the first...
The Irish economy is one of the few in Europe enjoying any kind of recovery, partly down to some good luck on energy import prices and the weaker exchange rate. The recent nervousness about economic prospects in China is not the principal threat to that recovery. The bigger threat comes once again from the international financial situation. With the eurozone architecture unreformed,...
Last Tuesday's announcement from Ryanair that Europe's biggest carrier may commence interlining with long-haul airlines is hugely significant for Aer Lingus and for Dublin Airport.
This morning's Sunday Independent poll asked a number of interesting questions about the public's personal experience of economic recovery and expectations for the year ahead, as well as preferences for tax cuts, should there be any in October's Budget. The context is important. The Irish economy has been through the sharpest contraction since World War II; the quickest rise in unemployment it has ever gone through; a monster banking bust, amongst the largest ever endured anywhere; and the indignity of the country forced into a financial rescue from official lenders for...