GDP fell last year by 0.3% while GNP figures rose by 3.4%, that is quite a difference obviously being caused by the patent cliff. With rising employment and retail sales the GNP figures are giving a better indication of whats happening in the domestic economy. GDP for Ireland is c.15% higher than GNP caused by multinationals which gives us a better debt/GDP ratio than we really should have, these converging will give a more accurate debt/GDP ratio.
Yep our budget deficit is measured in debt to GDP and this is the measure the troika uses to measure our performance. Lower GDP means more cuts/taxes. Should have gone with the full adjustment in last years budget (as recommended by the ESRI amongst others) in case something like this happened as opposed to the more electorate friendly version that transpired. It’s blown up in the government’s faces now with a possibly harsher budget required this year now. Muppets.
Yes, come Oct 15th Budget day, they will have the final official 2013 figures (out in June) and the Q1 2014 figures (also out in June)
They won’t have the major Nov tax take figures, so the GDP figure (coupled with tax figures up to Sep) will be crucial.
The Gov may be smarting from some lost seats in teh Sumemr local & EU elections though, so can’t see them hammering themselves further with bigger cuts.
Quick question, how sustainable is rising GNP when GDP is falling ?
Given our level of FDI, the latter has, historically, always been the driver of the former.
I see the biggest contributors of GNP rises were construction and agriculture.
Is the construction side of the GNP recovery a temporary movement as people spend saved money on projects they were putting off (e.g. home improvements etc) or is it more solid than that ?
Given Noonan’s recent comments on possible tax cuts, they may not want to raise taxes. So its back to health, education and social welfare for more cuts.
There is expected budget adjustment of €2.5bn this December, doubt they will go over this if needed but instead go for yet an other austerity budget in 2015 (remember Labour are in coalition ) they have a bit more breathing space with very low bond yields. Falling wages and very low inflation will also mean it will be hard this year to hit tax targets as income tax despite rising employment is not going up and low inflation is not good for VAT revenue.
