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Updated 10.28
THE GOVERNMENT HAS been painting an overly rosy picture in its budget forecasts and will find it “very challenging” to deliver on its promises over the next five years, according to its key financial advisers.
In its latest budget assessment, the Irish Fiscal Advisory Council said Ireland’s overall economic prospects were good with strong growth and lower unemployment boosting the public purse.
But the council warned the predictions the government used in its last economic update, the same figures presented in its much-maligned spring statement, didn’t “present a full picture” of the costs tied to an ageing population or its explicit pledges to cut taxes.
The official Finance Department outlook was for the budget to swing into surplus in 2019 – a major turnaround from the 4.1% deficit recorded last year.
“This would appear very challenging to achieve while maintaining current services and meeting demands for increases in public services due to demographic and other pressures,” the council said.
Any discretionary tax cuts would further increase the need to squeeze public spending over the coming years making it difficult to fund known future expenditure demands.”
More spending, less tax
Since the spring statement, Public Expenditure and Reform Minister Brendan Howlin agreed plans to hand back over €2,000 to most public servants between now and 2018 at a cost of €566 million to the exchequer.
The government has flagged giveaways worth €1.4 billion in its next budget with the total to be shared equally between extra spending and tax cuts.
Tax returns are €734 million ahead of target so far this year – and could end the year over €1 billion up on forecasts, according to analysts. However the alarm bells have also been sounded that expenses will outstrip expectations.
The council, which criticised last year’s budget as a “missed opportunity” because it didn’t include €2.1 billion in planned cuts, said the state’s forecasts should include figures based on “policies envisaged” and the latest update didn’t necessarily offer realistic projections.
The Fiscal Advisory Council was set up in December 2012 to assess the Finance Department’s official forecasts and to look at whether the government was putting in place good economic policies.
First published 6.02am
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We dont have any money to give away but FG and LAB have to buy their way back to power
So what are SF and the rest of the LLA doing differently:
1. No USC
2. No water charges
3. No property tax
4. Higher welfare payments
5. Aim to reunify Ireland (SF)
All to be paid for how?
Frankly MK, and I have no love for SF or other, allegedly left wing parties, by refusing to pay the gambling debt of franco-german bankers, is what the Sinn Féin leadership will tell us.
Again, frankly, this has not worked for their Greek political allies (nor will it work for the Spanish) but, it is a good idea and ought to be the policy of whichever government we elect next year!
Having policies that have no hope of being implemented is what most people are p*ssed about, so do we think SF and the LLA should continue this process, just because it’s a good sound bite?
When FG/Lab policy is “give Paddy a couple of extra quid a week so he can buy an extra pint” and we will be a shoe-in come 2016.
Yup, but that’s the electorates fault for being easily bought.
Just like what SF and the LLA are doing.
What’s happening in Greece is quite telling.
Sinn Féin proposes tax breaks for botox and moisturiser, to tackle the aging population.
Joey,
A budget deficit (or surplus) is irrelevant to a nation which controls it’s own currency. A sovereign currency issuing nation (e.g. Britain) can sustain any size of debt or deficit once it is denominated in the domestic currency.
In contrast, Spain Greece and Ireland don’t control their own currency and can therefore be held to ransom by the ECB/EU who hold the purse strings. Democracy and the Euro are incompatible.
Joey – ever heard about Syriza and a country calked Greece. U obviously haven’t. Over 40% of people under 30 unemployed, no money to pay public service and economy down 35% in last 2 years for even talking about doing exactly what you think SF willing be doing.
I suggest you go read up on it
So, Waffler, if our budget deficit was a billion pounds, all we need to do is devalue our currency to the point that a can of Coke costs a billion pounds and we can right it off?
What about the people who earn a fixed salary of say £35k per annum? They can no longer afford food. Good job.
Mk76 there is always a way.The banking debt will either have to be restructured or defaulted.Things are not good they say they are but there not.According to the eu we should be still doing austerity cuts.Not spending.You cant build an economy on cheap labour.Replyed to your question on other page._.
Do we trust them thats the questionshttps://youtu.be/523FLk2126g
Greece stood up on their own. Maybe if they had Ireland and Spain standing with them things could work out better for us all.
Just another “if” to try and defend broken promises and ridiculous/failed policies.
@Waddler Mooney….. here we go again, printing billions of our own currency would just devalue the currency, not solve the problem. Look what quantitative easing did to the value of the euro…….
Baz Greece’s problems aren’t Syriza’s making.
Richard,
A sovereign currency issuing nation can pay off its own currency denominated debts without the need to devalue their currency. The ‘debt’ and any interest due is paid via simple keystrokes at their central banks.
For example in U.K. the Bank of England simply keystroked £850 billion into existence to cover the cost of their bank bailout and they did so without any significant inflation in sterling.
This is possible because there is no simple linear relationship between expansion of the money supply and domestic price rises (inflation). The point at which inflation rises depends on the availability of real resources (goods & services) versus the actual demand for purchase.
In other words, the creation of new money is not in itself inflationary if there is sufficient real wealth (goods & services) to buy with that new money. This is especially true if the new money is directed to the productive sectors of the economy for example through infrastructural improvement which leads to GDP growth and so more availability of real resources to purchase.
The modern economy is characterized by an excess of production so there are rarely any shortages of goods & service available for purchase and so significant general inflation and the price of a can of Coke is not a concern.
Justin,
There is no direct relationship between Quantitative Easing and Fx devaluation.The U.S has implemented a much larger QE program than the EU and has added $3.5 trillion to its balance sheet since 2009.
http://www.bloombergview.com/quicktake/federal-reserve-quantitative-easing-tape
Despite this massive dollar expansion, the dollar gains in value against the Euro whose latest QE program has only just added €120 billion to the ECB balance sheet in the first installment.
There are in fact no models which can accurately predict Fx movements such is the number and complexity of interrelated variables involved.
For example we can see that sterling has gained very strongly against the Euro. Now why is that when the U.K. has engaged in large monetary expansion under QE programs since 2009?
@ Stephen Agreed they aren’t of Sryiza’s making, but they categorically promised to sort them out with some ballsy policies, but have spectacularly failed to do so.
@waddler….is that not what Zimbabwe tried? Year-on-year inflation running at more than 231 million percent. they were also the first country in the world to print a 100 trillion RBZ dollar note. …now shops don’t except the currency as it’s virtually unless. Zimbabwe money machine was the source of the hyperinflation. The government spends, and the RBZ (royal Zimbabwe Bank) finances the spending by printing money = country in ruins.
Can’t wait to become a trillionair Waddler :)
No DM. There is no comparison between Zimbabwe and functioning modern economies such as the Eurozone nations.
The Zimbabwe hyperinflation was the result of a catastrophic collapse in productive capacity for political reasons and a large foreign currency debt obligation. There was little availability of real goods & services to purchase with the newly created RBZ currency and so hyperinflation followed. (Ditto for Weimar Germany) Neither of these factors apply to the modern day EU which has the monopoly fiat currency issuer in the ECB and is an economic entity with massive productive capacity lying idle.
Since the 1980s the global money supply has increased almost exponentially as the deregulated commercial banks massively increased their loan books and expanded the money supply (The money is uncreated as the loans are repaid but at a much slower pace). And yet there has been no hyperinflation that the monetarists screech about.
There is an excess of productive capacity and output in the developed world. Therefore there is no lack of any of the real resources (e.g. energy, food, material to build housing etc) to meet the human needs of the citizens of the Europe or anywhere in the developed world. Neither can there ever be a shortage of money at a macro level as it’s created at will by computer keystrokes. So all the ingredients are present to solve the economic and social crisis in Europe and elsewhere.
Therefore it in inarguable that austerity and deprivation is a policy choice at national government and EU level .This policy choice serves the interest of capital as more and more of the world’s resources accumulate to the 1% at the expense of the majority. The power and control of the 1% big capital elite would be eroded significantly if it was understood that the sovereign state faces no financial constraints within the domestic currency and so has no need to obtain money from private sources i.e. the financial markets.
“There is no direct relationship between Quantitative Easing and Fx devaluation”
Yes there is, of course there is. If you print more of any currency, then the value of that currency decreases! its simple economics. Look at the price of oil, it has remained pretty much at the same level since december, however the price at the pumps has increased since March, when the quantitative easing program began. This is because we import our oil, and pay for it in US Dollars. The value of the euro dropped against the dollar as a result of quantitative easing, hence the increased price at the pumps.
“If you print more of any currency, then the value of that currency decreases! its simple economics.”
No Justin. As explained and supported with links, the U.S and U.K have created far more of their own currencies than the Eurozone over the past few years and yet the dollar and sterling gain in value against the Euro.
There is no direct relationship between monetary expansion and foreign exchange devaluation. There are in fact no models which can accurately predict Fx movements such is the number and complexity of interrelated variables involved.
Gerald, you know the old adage that will prevail come the election….Fool me once…Shame on you…Fool me twice..Shame on me. Question is : what’s the alternative ?
It’s a big mess and takes time and friends to stand with you to fix it. At the moment Syriza don’t have enough of either.
It wouldn’t be like them to mislead us would it?
Nope, it’s not like they’re lying to get back into power or anything
The government doesn’t do predictions it just does wild guesses.
Usually on the back of a fag box.
More comedy re Irish Water……
Not the only Irish Water companies set up, I remember the one Liam Deegan found another that was set up in Wales in Nov 2014… http://www.endole.co.uk/company/09311623/irish-water-ltd
The director is an ex-FG member who failed to get elected in the 1980′s, William O Grady. https://irishelectionliterature.wordpress.com/…/lea…/…
Everything about IW smells.
Sorry last link was incomplete, here it is in full… https://irishelectionliterature.wordpress.com/2013/12/11/leaflet-for-john-dockrell-aine-elliot-william-ogrady-fine-gael-blackrock-1985-local-elections/#more-27069
Denis O’ Brien’s name cropping up again; i’m not laughing!
That first link you posted Al ca , if you go to the end and of page and see “Mutual Companies” link,
he also has a company called “Uisce Eireann”,
Interesting..
If I was suspicious, I’d say some one was setting up companies on the off chance that they might be charging a ‘certain company’ that may be sold in the future consultancy fees for advice that can be written off against profits and assist in the movement of money out of that ‘certain company’ when it should be spent on ‘certain infrastructure’.
Luckily, I not suspicious……but everyone else has the right to be…if they wish.
Shur we’ve turned the corner, green shoots, rising tide, under 10% unemployed. Shur didn’t the indo tell us.
Coping classes being continually squeezed out of existence by a political class merely focused on gaining short term electoral success. Same as it ever was.
Has the man our so called leader Kenny come out of his bunker yet?
He is waiting for permission Paul…..
I dobt we will see him until next Tuesday – Angela Merkel`s not due until Sunday at the earliest…But I believe she is huge by now.
He needs permission from Merkel and the German Parliament!
If we are borrowing billions to keep the country going ,how come we have money to give away ?
Because buying votes is more important to FG/LAB than special needs assistants or hospital beds.
It is time that the government made the corporate sector pay more, how else can they hope to balance the books….
Same old, same old. Very worrying.
Restoring public sector pay at this stage was always going to affect the other area of the economy. With new European guidelines this automatically means lack of funding for all other areas.
FG & Labour = Cowen & Ahearne economics
Would you expect anything else from this shower. Meanwhile how the f*ck is the Dublin, and by extension Irish, economy going to continue to expand when there is nowhere to live in Dublin. Have those clowns in Leinster House any clue of whats happening at the moment, obviously not judging by their inactions on the issue. I know graduates paying a third of their wages on rent at the moment, absolute madness!
Even the dogs in the street know that, what i want to know is whose pocket it will end up in.
You wouldn’t be surprised, they have been method acting since 2011 : Running government in the style of laurel & hardy.
It’s about time some commentators started to highlight what is really happening on the streets. All this rubbish about a recovery is just propaganda. There is no real recovery, and there will not be any real recovery until our banks start to act like banks again and do what they should do, that is lend money to the indigenous Irish SME sector. My guess is interest rates are too low for them to risk that, anyway that might just spark a real recovery that we could shout about.
So we spend over 4% more money than we have, have one of the highest debt to GDP ratios in the world with debts of over 200 billion euros and this govermement thinks it has extra money to play with ya kick the can down the road another few hundred miles so our kids grandkids will be still picking up this mess but don’t worry the good ole Irish politicians are some of the best paid in the world with a pension scheme that’s like winning the lottery so we are in good hands
What grandkids Ian? Things are so good that 3000 young people, between 20 and 29, the cream of our youth and our hope for the future, are leaving the country every month. This is the legacy of FF, FG, Labour corruption and incompetence.
No mention of this in Department of Finance figures but maybe they lost the file.
It’s a joke Martin it’s pure propaganda by this goverment, a lot of people are still struggling with big debts, decimated wages or no wages at all, higher taxes to cover our huge debt bill with next to no investment in infrastructure, hospitals, schools etc because the country is broke. Small business can’t get money because the banks want you to have 99.5% deposit its a joke. I was a plumber in 09 got left go , 4 weeks later I moved to Australia and if I go back now and wanted to reeducate myself I am classed as a non resident and have to pay full whack the truth is the government doesn’t want us back. Big change is needed in Ireland this government is pissing in people’s pockets and telling us it’s raining I dunno who’s worse us or them.
I think this talk of loads of money etc is just pre election spin. It’s the same old rubbish we’ve been hearing for years. Is it any wonder Ireland stays stuck in the same groove year in and year out. What’s needed is a level of honesty in our leaders. Catherine Murphy is showing them up and not playing their game and fair play to her.
Something has got to give ..THEIR PENSIONS AND OVERBLOWN EXPENSES!!!
But different to ordinary pensioners and disabled then. It is go away, and get what you can from the ever diminishing pension WE EARNED after many years of work.
Propaganda????
This ‘Fiscal Advisory Council’ is nothing but a government excuse to follow the FG conservative ideals.
The gov says ‘arent we great – giving you all this money, we really care about the people……but Oh No The ‘Fiscal Council’ (set up by the government) has said better not spend that money – we’d best not then.
The government gets to sound all carey sharey and ‘responsible’ all at the same time.
Pure Arseholery is what it is
Does anybody actually think that the Fiscal Advisory Council is anything other than the “bad cop”, set up by FG so that they could appear like the “good cop” when that level of austerity isn’t delivered?
they are an independent statutory body.
Any idea where the EndaBunker is?
Do not fall for their lies! Everything they promised they lied about.When are we going to see any of these crooks in Mountjoy where they richly deserve to be?
Who are these Fiscal Advisory Council lads? Who set them up? Business? Government? Europe? And why are we heeding them?
From google, “The Irish Fiscal Advisory Council is an independent statutory body established as part of a wider agenda of reform of Ireland’s budgetary architecture.”
We are not heeding them, shur thats the point of the article!!
Once current Government heeds the advices of Fiscal Advisory Council – which is manned by serious and experienced Macroeconomists – and not buy power at next General Election, no future political party combination can bull their way into power with nonsense policies.
With FAC and people like Catherine Murphy, Ireland’s finances and democratic values are in safe hands.
It would appear that a common sense approach is now to be adopted by NAMA regarding Development sites, whereby Construction Companies are to be granted licences to build residential units on NAMA held sites, with final sales proceeds to be divied up under some pre-arranged formula, thereby obviating the need for one party to find advance finance to acquire lands and for the other party to agree an equitable price.
Finally, some joined up thinking by our ruling masters!
FAC’s hands are all over this rock-of-sense approach.
Keep up the good work!
Please explain Catherine Murphy’s fiscal policies.
Also, you do realise FAC are supporting continued austerity, right?
@Rory J Leonard – I can’t tell whether you’re pulling the pi$$ or what.
But the notion that there is such a thing a ‘serious and experienced macroeconomists’ is a joke. By extension, being experienced, then they must be up to their neck in the mess we’re in – and so to be ignored at every opportunity.
And as for capitalising ‘macroeconomist’ – it’s not God we’re talking about here, just suits.
“people like Catherine Murphy, Ireland’s finances and democratic values are in safe hands” she is independent, and if elected again, she will be in opposition. How exactly is our future safe in her hands? FAC want to impose more austerity on the Irish people……..
if carlsberg done goverments we probably would be getting money back in the next budget
So a surplus by 2019 – wow, they fix the economy and it only took 12 years!
Yeah that is unexpected,
Watch the flood of negative comments on this forum, compared with the tumble weed you get when there is positive news.
The funniest thing is most of the posters don’t realise The Fiscal Advisory Council are calling for continued “austerity”, but support them when they disagree with the gov’t.
You couldn’t make this level of stupidity up.
I know MK76, most people here just hate everything government related without even looking into what the story is about. The people complaining about austerity imposed on them are the same people complaining here when in this instance the government is trying to ease off the austerity.
No givey, no votey.
We are part of a dysfunctional currency zone that flounders from crisis to crisis and has killed growth. An economic titanic.
The wider global economy is predicted to grow at just over 3%, which is not great, its expected to stay below past performance for a long time to come.
We still have a long way to go and generosity should start at the bottom where it is most needed and puts most back in to the economy.
this government deserted us when our constitution was being attacked, they have brought shame upon each office they hold.the people defended the constitution and they fg,lab,if they have any decency left,should let the people decide who makes up our next budget.
the people do decide , through the TDs they elected to the Dail in 2011.
Surely not Liars. ‘not one more cent to banks’
They lied going in to government and they peddle lies to stop them going out. The electorate is to wise after all the austerity and knee bending to European masters. Times up yee crooked bast&&ds…
The government is stuck between a rock and a hard place. If they go with the Irish Fiscal Advisory Council’s ideas, although they are probably what’s best for the economy over all, it would result in FG not having any chance of getting elected for a second term. By giving money back to the people that were cut the most through increased taxation and USC, they will be able to buy some votes, but it will probably result in a nice budget for 2016, but a neutral budget for 2017/2018. I think they will go with the latter.
ah yes, another 3 euro to splash out on luxuries from 2016. does anyone like me as a pensioner find this insulting
3 euro raise after 6 years. is there anything to be done to rebuff this insult to our dignity . yes yes yes, . we have an election coming shortly. heres a chance to put joan burton the blabber mouth in her place.
It is the last budget before the election, who will do this one the German government or our ones???
Is Kenny talking out of one side of his mouth in that photo?
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