From the dismal north to the dismal fiscal deficit of the south…

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And if you thought the news from Northern Ireland was depressingly dismal, it’s budget day in the Republic

What is most distressing about the current situation is that policymakers and some economists appear to echo the Dickens character Micawber in ‘David Copperfield’ that “something will turn up,” which is the benefit of a recovery in the economies of Ireland’s trading partners. However, given the severity of the recession, the end to easy credit and the extent of the public debt in the developed countries, there will not be a return to the mainly high growth two decades that preceded the economic crash.

And in the ‘if I were you, I wouldn’t start from here’ class, Morning Ireland starts with Sinn Fein’s view of the budget process and moves on to Niall Collins of Fianna Fail and finishes with Stephen Donnelly weighing into the government’s folly of carrying the burden of two defunct banks and paying 3.5 EURO in the next fiscal year as ‘immoral and economic stupidity’.

In today’s Examiner Colette Browne enumerates what’s popular and it is not what she believes the government has planned for this afternoon:

While the Government is trumpeting its property tax as the most innovative item in today’s budget, tentative plans to increase the universal social charge on incomes over €100,000, from 7% to 10%, were quickly abandoned.

The speed with which this idea was torpedoed shows the Government is completely out of touch with public opinion, after a whopping 88% of people, in a poll in the Sunday Business Post, said they favoured just such a measure.

In fact, of all the questions posed by Red C in the wide-ranging poll, this was the one that received the most support and one can see why.

Instead of the notional money that will supposedly be hauled in from a mansion tax, the USC increase would have netted €200m — a figure that could be relied upon when the Government is doing its maths and trying to balance the books.

Furthermore, as self-employed people are subject to a 10% USC on incomes over €100,000, it seems curious that the Cabinet was so averse to extending that rate to the PAYE sector.

  • RegisterForThisSite

    really is small potatoes compared to Osbornes current speech in the COmmons, just announced that the cost of Bradford and Bingley is coming on-balance sheet, a whacking £70,000,000,000.00.

    Still about 250 billion being held off-balance sheet (est)

    Just gave the figures for the deficit over the last few years, after all the pain, borrowing is down from about 160,000,000,000.00 in 2009 to about 110,000,000,000.00 2012/13, it confirms that circa 90 billion of cuts has produced 50billion of savings.

    Rumours of a loss of Britain’s AAA rating happening soon, looks more likely now.

  • RegisterForThisSite

    Good grief Danny Alexander just admitted that borrowing has only fallen by 1.5 billion this year, the BBC is slowly working thro every minister brave enough to be interviewed and basically handing their asses to them on a plate

  • BluesJazz

    Well, a rise in all benefits of only 1% for the next 3 years (well below inflation) should have the usual suspects squealing very shortly. Who’ll be 1st out of the blocks with “but we’re a special case” in NI on this one?

  • RegisterForThisSite

    Thing is BluesJazz (without wishing to be a usual suspect) benefit payments tend to go straight back into the economy (even if it’s the local offie) so I think you’ll find even Mr Tesco and Mrs Lidl will be upset with that one.

    Indeed, you’ll find that todays £5b cuts will be straight out of the local economy as will the £10b that Danny A is tasked with finding in the next 6 months.

    This is why jobs are being lost, less money floating around, less being spent, fewer jobs, resulting in less money floating around etc etc……

    These ain’t good times and if GB loses it’s AAA rating in the near future that then the deficit starts climbing again, and like I said £80Bto save £50B is not worth it.

    Whatever about welfare, I feel sorry for the lowly paid, the next payhike in Train fares is a month away (inflation +3%) and petrol will prob start rising again soon. Drivetime yesterday had a section on workers who sleep in their cars cos they can’t afford to drive to work everyday. It’s getting rough with 14million officially in poverty, wouldn’t be surprised if we started getting food riots over the next 12 months as it seems to be a regular subject on radio 5 these days

    But heyho Richard Branson has picked up a few bargains recently so it’s not all bad

  • Mick Fealty

    That’s precisely the logic Mr Howlin has given for not reducing benefits this year. But Child benefit goes down for the third time since 2008. Over 70s medical cards to be means tested.

  • jthree

    What I fail to understand is the real term cut in the tax credits.

    A lot of the pre budget spin was about supporting the ‘strivers’ at the expense of the ‘skivvers’.

    Working tax credits are essentially an in-work benefit which helps make work pay for the lowest earners. Combined with the child tax credit it’s particularly important to low paid working women with children – people who are often the very definition of strivers.

    What’s the logic for shitting on these people?

  • Neil

    What’s the logic for shitting on these people?

    Tax break for big business. Usual Tory shite, I suspect they won’t be getting a second term this time though.

  • RegisterForThisSite

    Mick, It can work for Ireland as most are still a lot further above the breadline than in the UK. Heck, in the last 10 years here in London, the pubs gradually emptied, then in the last 4-5 years people stopped eating out, and the takeaways that had been gloating in 2009 are on permanent special offers. Don’t even like going out all that much anymore as places are so empty outside central London.

    Turns out Osborne was massaging the figures now, the deficit hasn’t budged, the 1.5 billion actually claimed came from flogging the 4G licenses.

    Things are not looking good, listening to Drivetime on Radio 5 its the worst battering I’ve heard the Gov take in a long time, ie, no-one is believing the forecasts, and seems likely the AAA rating will be cut in Q1 2013. Now thats something I’ve had fears about for a while, sterling is easy prey for the markets unlike the Euro or Dollar. Hang onto your hats.

    Funnily enough someone else mentioned food riots to me this evening………..

    Neil, sadly Brown was the last Chancellor of any ability Britain had, Labour have no leadership team, they’re no better than the Tories, depending on when the election happens I can see smaller parties making gains, or indeed people not bothering to vote.

  • BluesJazz

    RFTS
    Both governments are either
    -in denial
    or
    - trying to cover a major chest wound with a bandaid.

    Austerity until 2018? Add another 10 years to that, the deficits for UK and Ireland are in lalaland. NI has had some protection from reality thanks to the large public sector, but that wont last come 2015.

    The most thriving pub in Belfast is Wetherspoons at £1.80 a pint.
    Outside Belfast the pubs and restaurants are in a bad way. For anyone under 25, the situation is dire.

    Labour are probably anxious about winning in 2015, because the situation is going to get worse no matter who is in power. The French are now finding this out.
    It’s beyond national governments.

  • RegisterForThisSite

    BluesJazz, there are key differences, Ireland has loads of fat that hasn’t been touched, (happy to be corrected on the figures as its a while since I saw them) Irelands GNP is circa £4000 per head, the UK is minus £2500k, Ireland per head is the most productive country in Europe, just on figures alone I think it comes in behaind the Germany and the Netherlands (thats not per head, thats ££££)

    THing is I can see Ireland working it’s way out of what is a large unexpected bill, whereas the UK has lived way beyond it’s means for many years and potential tax dollars are pouring out of the country. I mean the harshest measures in decades has failed to budge the deficit this year, and the Govs growth projections are being laughed out of town.

    And NI’s bloated Civil Service has ruiined the place, why do you think Ireland is full of companies and NI isn’t, cos there’s no need to attract them when you’ve got a bloated CS with loads of jobs, it’s just economic heroin, and you shouldn’t thank someone for feeding you heroin

    A talking head mentioned today thay the UK had gone from 7th to 33rd for infrastructure in about 5 years, we are sadly falling apart, even Wills and Kates utterly fantastic news has lasted less than 24 hours (apart from the Aussie wind-up) and the Olympics are just an expensive memory, not surethe bread and circus crack is going to work for much longer

  • BluesJazz

    RFTS
    Ireland has twice the unemployment rate of the UK at 16%. On higher benefits. That’s not sustainable and the rate is unlikely to come down in the next few years.
    The UK had to lend money to the Republic in the bailout.

    But this is simply academic.

    Ireland can be replaced tomorrow by any emerging economy for the production you mention. And it will.

    I agree with you about the NICS as economic heroin,
    But…what to do? No civil servant would get a job in the real world. They couldn’t hack it. Especially the feathernested higher level ones at DP and above.

    Both governments have put the economic burden onto the generation(s) to come. Who will be the most highly indebted. A long decline and fall in living standards lie ahead in Europe.

    Who do you think will win the X factor though?

  • RegisterForThisSite

    unemployment is hard to measure, Thatcher stuck everyone on incapacity to skew the figures and it’s still hard to read, also as unemployment benefit in Britain is so bad it’s not really worthwhile for a middleclass earner to register, but yes it’s bad in Ireland, esp as a whole industry ie construction trades need to reskill.

    But as I said, unemployment benefit goes straight to local shops and pubs so it keeps the economy going

    Regarding Britains loan, it was more a token gesture, £7b IIRC and also IIRC Ireland only drew down 500m in the first year (no idea what it is now, but small potatoes)

    Ireland is largely high value small footprint manufacturing as it has few natural resources ie coal or steel, Pharma is a big one, an industry I know, trust me all the big Pharmas have tried Mexico and India for cheap formulation and production and all have failed, Ireland is a goldilocks place for thwem and remain so.

    Irelands threat was Eastern Europe, but thats changing, Poland is introducing a harsh no-nonsense CT next year.

    I disagree re NICS, 30% of grads leave (or don’t return) because the desire/need to build a real economy is not there. Its reflected from Stormont down, all political parties in NI are economical illiterates. Yet strangely SF can produce to really good finance people down south (go figure)

    And ‘captains of industry’ in NI just snaffle multiple directorships on public bodies at 40/50k a pop instead of building up companies. Which annoyed the hell out of me to see the games at NI Water being decided at Tribal level instead of people questioning their value to NI

    Frankly, a UI would be a fantastic project for the South, it’s fertile ground and there are a few easy and big wins to get things going,

    x-factor, meh, Masterchef Australia is the daddy,

  • RegisterForThisSite

    oh, re economic illiterates, amazed that no-one spotted the CT rate in the budget, really important to NI and Ireland, but less so then burning Alliance offices apparently