Initial ESRI estimates are that GDP will take a 7.1% hit from the virus.
Lets say 10% and run some numbers based on that.
Base Economy GDP = €340bn at end Q4 2019 and Debt/GDP 60%.or €204b.
Less €34bn (10%) hit to economy. = €306bn GDP at end 2020
Plus €45bn in excess government spending during 2020 (explained above), and less a rainy day fund and NAMA windfall of €5bn added to that €204bn = €244bn. €40bn in excess debt.
Crude estimate therefore is that we end 2020 with
We get A Debt/GDP ratio of 79.7% at end 2020. based on those numbers. This will pale in comparison to the UK/France/Spain which will all be north of 110%, if not 120% and Italy “Wahhhhhhhhhhhh” and Germany and the Netherlands will end up same as us or thereabouts.
Bond interest will largely depend on two things.
- Fiscal Track record, which is good. I don’t see Germany/Netherlands/Ireland being penalised.
- Whether we are run by Shinners with expansive debt accrual schemes or by a ‘national’ coalition with a 2 year mandate to stabilise the economy post coronavirus.
Our ability to grow rapidly out of the end 2020 situation will be far more constrained. It will take a lot longer to get from 80% to 60% Debt/GDP than it did the last time round in the late 2010s.
As for the housing crisis, banning Airbnb outright might be all that we need to do. in the next 2-3 years. Not sure how this is going to play out exactly but Airbnb demand will be much reduced in Dublin from now on.
Nor am I saying the economy will grow or stabilise in 2021 or that the government will not run a deficit in 2021.