The National Debt


Uncle Sam lovin’ brass plate Russian commies - dang you can’t trust nobody nowhere no more!



I am seeing some large Coronavirus issues, not least that Apple are unable to order anywhere near as many iPhones as they did last year…because Foxconn is making masks instead of itoys at present. You cannot have contract manufacturing if only 1 in 3 of the 300m migrant labourers in China are actually back at work, which is the situarion right now.

Large FORCED writedowns on the aircraft fleets owned by the leasing industry are another distinct possibilty as many airlines will go to the wall in the next year.

Therefore the Irish GDP numbers will take a very large hit starting with Q2 pubished in July 2020. While we will go below 60% debt/gdp any day now the jury is now out on whether we finish the year below the magic 60% of GDP and that is entirely apart from whether the shinners get in and blow a massive hole in the budget as they are threatening to do,

So while the Debt/GDP outlook was benign at the turn of 2020 it no longer is to my mind. As for 2021 and proper Brexit. … :frowning: :frowning:


End 2019 debt GDP can be calculated now.

GDP (unrevised) €339,24bn > from
Gross Debt (ntma) €203.6bn from

This means that we are bang on the 60% DEBT/GDP Ratio at the end of 2019 (only by around €100m or so making it around 60.03%) and we are out of the Eurozone deficit monitoring system and can abolish that stupid fiscal space. :smiley: :smiley:

We are back a netch over 61% until the large bond redemption in 4 weeks which should then bring us under 59%.


@2Pack Care to estimate where our debt/GDP ratio might be by end-2020?

Revenue, especially from Income Tax and VAT, is collapsing while expenditure on health on social protection is exploding. GDP growth will turn negative. Yields on our 10 year bonds were in negative territory in February. I doubt if those days will return.

At least we will have plenty of company in the Euroarea.:mask:


Well now Lefournier. I have to make a stab at 3 things there. One added after you asked for it.

  1. Reductions in GDP itself, EG the aircraft leasing sector is now worthless compared to the beginning of Q1 2020. Many of their customers will be bankrupted by the summer and their inventory will have to be scrapped in some cases (EG old 757s and 767s will never fly again but they had a book value a few months back) . On the other hand our medical pharma industry will do rather well and their IP will not be massively impaired.

  2. Enhanced government non budgeted spending as a direct consequence of the Wuhan Virus will result in an overspend of at least 3% of our end 2019 GDP which would be ~ €10bn or 6% of our end 2019 GDP which would be ~ €20bn…likely the latter.

  3. However Point 2 is overspend, the government will also have to finance shortfalls in budgeted income of around €25bn (after some cuts in non health spending) as well as that overspend so that could mean €25bn of borrowing.

Total spending related to points 2 and 3 on health and on business supports and unemployment gives a Total = €45bn or around 13% of end 2019 GDP but remember that GDP itself will fall so it will end up as much more than that. The Irish government, in a normal year like recently or in most of the 2000s, spends remarkably little of GDP (around a quarter).

A caveat here is that writeoffs in aircraft valuarion can become writebacks in valuatiions in future and that such writebacks can manifest in the numbers as robust GDP growth in future

All that said I estimate that end Q4 Debt/GDP will go from 60% at end Q4 2019 to 85-90% at end Q4 2020 but with the prospect of some reasonably robust growth from leasing writebacks during 2021 and 2022 that will not be reflected in the ‘real’ economy, like GNI*

Note that this assumption includes the following!!!

  1. The Wuhan Coronavirus will not be an endemic or periodic episode that recurs every winter, but a one off that is controlled in a year.
  2. Large scale vaccination will have taken place by end September 2021 and some already by May 2021.
  3. The banks will not have the begging bowl out for more capital by this time next year.
  4. Comsumer spending will have recovered a good deal by summer 2021 and the travel industry will function at 50% of its original capacity during the summer season in 2021 (inbound and outbound tourism) and our 2 main airlines will survive this unlike many European airlines.


(expanded point 2 on request)


Why make that assumption? All the reading I’ve done indicates immunity is temporary (~3 months) and this thing will circulate the globe indefinitely, like the common cold. Therapeutics and vaccines will arise, an effective vaccine could take 2 years to manufacture at scale I think. The traditional flu vaccine is hit and miss year to year because mutations can be hard to predict.


I can make any assumption I like as long as I properly disclose the material ones OwenM. :stuck_out_tongue_winking_eye: Where is your analysis of the debt…and material assumptions???


Perhaps, but pathogens like these tend to mutate into less lethal forms over time, as lethality is a poor survival strategy.


@2Pack Can you make a stab at the third factor which goes to Debt/GDP i.e. government revenue?

Private sector income will be devastated for the next few months and VAT returns (outside retail) will collapse. ~€20 Bn. extra spending and ~€15 Bn. loss of revenue would add ~€35 Bn. to our national debt.

Will our bond yields revert to zero by year-end? If not, that extra debt will sting!


yes sorry, see point 2 again, edited


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

Economy €306bn
Debt €244bn

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% :kissing_smiling_eyes::kissing_smiling_eyes: and Italy “Wahhhhhhhhhhhh” and Germany and the Netherlands will end up same as us or thereabouts.

Bond interest will largely depend on two things.

  1. Fiscal Track record, which is good. I don’t see Germany/Netherlands/Ireland being penalised.
  2. 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.


Again, more interested in Debt payment cover from Revenues, than Debt/GDP ratio.

Revenues will collapse, and emergency budget already being flagged up.


NTMA says

we are well positioned to meet the borrowing requirements and challenges presented by this economic crisis

True enough but it doesn’t attempt to quantify the scale of our Exchequer borrowing requirement or the impact on GDP

SuperMario rescued Italy (and us) in2012. If the Eurozone breaks up over this, we’ll be on our own in shark-infested waters.


The NTMA will never do that, it is up to Finance, within ‘a’ budget, to quantify funding requirements and the NTMA goes out and gets the cash in and manages bond recycling on a predictable basis.

As for the Eurozone ‘breaking up’, specifically over the lack of agreement on Coronabonds today, that is unlikely. Italy has threatened to leave a number of times in recent years …repudiating debt…and quite simply it didn’t.

That recent threat from Italy has not been forgotten and was probably the main reason why Coronabonds were not acceptable to the Netherlands and Germany.

Coronabonds may come back though, specifically and only for purchasing of large scale Europe wide medical supplies and not for fiscal support which is what Italy (always) wants.

There is always the ESM >


I didn’t expect NTMA to decide on the deficit but their statement implies they have received no indication from D/Finance of the scale of borrowing required, which is no surprise as our government has resigned. We are spending without limits which may be necessary now but will have painful consequences.

Talk of a Eurozone breakup is not just crying wolf. The failure of the European Council last night leaves a chasm that can’t be papered over. 2012 showed the political resilience of the Single Currency but this crisis will test its limits even further. Is Christine Lagarde capable of squaring the circle?

Consider this example of EU conflict - extraordinary times


Yes, but as Merkel said there is the ESM which was not there in 2008-2010 . Anyhoo, this time we here don’t need special bonds, thank fuck. :frowning:


Special bonds is exactly what Italy & Spain want/need (+ France, Portugal, Greece).

Call them whatever (Eurobonds, Coronabonds), if there is no collective Euroarea bond, we will be back to the weakest link in the chain (Italy).


Eurea bonds? :wink:


Euroarea - the correct word for the “Eurozone”.