Public Finances - how bad will they get

over at blog a debate is going on how the exchequer and unemployment figures this week foreshadow pretty grim outcomes
Recall that the addendum document … /bl062.pdf in early January suggested two main outcomes : 37b tax take and a general government balance deficit of 17b deficit (9.5% gnp)

An emerging outcome of possible 30-33b tax take is now being discussed and an implied 20-23b GGD or some 12% GNP…

Worth following the debate imho. Nice detail on the evolution of tax by head by month over the last few years.

Anyhow : wondering what the pinsters think of these two figures? Total Tax take and General Govt Deficit?

No expert, but I think the reduced tax take (30-32) is reasonable. I still think the deficit figures are too low, mainly because I see unemployment continuing to rise rapidly, hitting 15% by the end of the summer and tailing off to about 17.5% by the end of the year. The extra social welfare payments will be large - not just unemployment assistance, but mortgage interest supplement, back to school allowance, medical cards and the rest. Note also that the extra unemployment will feed directly into PAYE, VAT, excise receipts…

Spending in all other departments apart from social welfare will be below budgeted at the start of the year. As the year goes on the cuts will get deeper.

so the cuts will be getting cuttier?

I made some predictions in this thread on the January Returns . I did not see any such predictions on the Irish Economy blog 8)

I am not prepared to predict beyond Q1 at this time but I believe the Q1 Take will be c. €10.8bn .

I have no idea what the Q1 outgoings will be because our Minister for Finance is clearly incompetent . Therefore I cannot predict the GGD . I do not feel that it will exceed €4.5bn all the same .

I will predict that the annual GGD will not be more than half of the annual take.

I feel that €20bn+ GGD on a take of less than double that is ludicrous , not even Fianna Fáil and the Green Party are that stupid. Consequently trending such a scenario out may be academically interesting but it has no basis in reality I am afraid .

Therefore I will predict that I will be more accurate in my forecasts than all the Irish Economy bloggers put together :smiley:

so your saying what for GGD? cant follow

Am i correct in saying that you are entitled to job seekers allowance for the first 12 months n are then moved onto job seekers benefit (means tested). Also isn’t the mortgage interest relief only applicable for 12 months or something?
My point would be that we may see some savings here in the coming months as the shit began to hit the fan 8 or 9 months ago. The cost to the state of your average unemployed person would be highest in the first 12 months would it not?

You quoted my Q1 GGD prediction and you quoted my disinclination to predict the year .

I think he’s saying that a lot of chop-socky will be applied through the year so it is pointless trying to figure it out.

A slash here and a slash there and pretty soon you’re back on target. Kung-fu economics.

Its the other way around. Benefit is your 12 month non-means tested entitlement from your PRSI contributions. The Allowance is means tested.

Was there something in the last budget that reduced the period to 9months? I’ve a half-assed idea I heard this on spud1. Also did the dept of finance release the monthly tax receipt targets?

i’d like to add the following observation which has a bearing on the rate at which money was/is saved and spent.

It took us 10 years to forget the value of money, it will take us less than 1 year to remember.

We are learning very quickly how to make money last longer and longer, and it is a lesson which will not be forgot easily.
The upshot fo this, may be that we are changing from a debt heavy household to a Savings heavy household.

i’m not sure what technically this will do to your figures, but as i see it, money is getting sticky.

The real sad thing is there isn’t a fish in the shagging lakes either… :imp:

It was reduced from 15 to 12 months for new claimants from January 1st and for those existing claimants who were less than 6 months into their claim i.e. the 3 month reduction was effectively backdated to all new claims from July 1st 2008.

And no the Depts revenue and expeniture profile is not available yet.

And we all know what happened to all the Carp ,don’t we, or are we not allowed say.

Carp?!? There was never any fucking Carp!

Thanks KN on the dole info,
After I posted this, I heard Joan Burton on vincent browne say they’re not releasing the projections until March! The only thing I can read into this is the budget resembles a dead parrot. Not sure if it infers a bonus budget is on the way, but it makes a mockery of the initial budget. I assume they’d use a monthly cashflow model in framing the budget, so publishing the monthly data should be a formality.

The budget projected tax revenue of €41billion, they now say €37billion, yet economists are now talking €32-33billion.

That translates into a €25billion deficit at circa 13-14% of GDP.


How can I short Irish government bonds?


We will not spend much this year folks… The NDP is dead in the water and we are raiding the NPRF for the recap money…

The deficit will not be anything near that…