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THE IRISH GOVERNMENT has all the economic reassurance it should need to cut taxes in this month’s budget – particularly after the added sting of water charges.
Goodbody Stockbrokers has sounded a warning note for the government if politicians were still thinking at all about spending cuts as it ramped up already-bullish growth predictions for the nation’s economy.
It forecast the Irish economy, which it labelled “Europe’s growth beacon”, would grow 5.3% this year, mainly thanks to booming exports, imports and business investment.
The prediction was well up on its earlier forecast of 3.5% GDP growth.
Goodbody expects the economy to keep motoring ahead for the following two years, revising its predictions higher to 4% next year and 3.7% in 2016.
The Central Statistics Office recently released economic growth figures for the year to June which showed Irish GDP had gone up 7.7% over the period.
Don’t choke the growth
Goodbody chief economist Dermot O’Leary had a blunt message for the government two weeks out from its 2015 budget based on the buoyant forecasts.
“Economic growth is going to do the job for the next 12 to 24 months – don’t try to choke off the recovery by implementing further austerity measures at this stage,” he told TheJournal.ie.
“Especially with the water charges coming in, there is scope to use some of those proceeds to start the journey of income tax reductions.”
O’Leary said Ireland’s combination of a high top tax rate – an effective 52% slug in the upper bracket – and the relatively low level it kicked in at could act as a “disincentive to work” as the jobs market picked up.
He said warnings from groups like the Irish Fiscal Advisory Council, which recently called for another tight budget, were “unjustified” given the speed of the country’s economic growth.
“The unemployment rate is still very high in Ireland at the moment and there is still a lot of spare capacity in the economy,” he said.
READ: ‘I didn’t notice the recession in the ’80s at all but this recession has been absolutely cruel’
READ: Here’s how Michael Noonan wants to end ‘boom and bust’ economics
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Even if we had to pay water charges and it was included in our house property tax it would have made some sense. To waste over 200 Million on staff, set up costs and meters is an insult to those that are suffering most.
The meters were never required but then again people went out and voted for Phil Hogan and in doing so got the rest of us what we deserved.
It’s called democracy pal, elections have consequences suck it up and move on.
Eh Daryl the current government made promises to get elected and then they reversed their policies when in power, that is not democratic. The last GE campaign was a sham. In fact FG/FF/Lab are the one party under pretence.
Nice to see you back Darryl. Here’s hoping you don’t get cut again.
Daryl what’s it like to be on a big fat FG/Labour advisor salary?
Btw it’s going to be e1.9billion since it was first talked about up until it is finally finished setting up in two years time. A lot of money to be throwing into another utility bill when it could have been a flat charge based on number of people living in a dwelling and done via the revenue. What hacks me off about FG and LAB is that whenever they are stuck for an answer they comment on how they inherited the position where the country owed billions to creditors all over the world with a diminishing tax base. If I was a creditor of the Irish national debt and I saw Ireland was putting e1.9 billion into water infrastructure I would be looking for my money back. It’s a lot of money to be investing when there are people starving on the streets, lack of funding for mental health services, lack of beds in hospitals and the HSE running a massive deficit of e600 million last year alone. It’s not even jobs for the boys as most of the people working on the meters are from the north and the rest of the UK. It’s crazy the mismanagement of our hard earned taxes and I say it all the time. People we need to put pressure on this government to resign for their mistakes before we end up in another bailout.
True but it doesn’t say a lot about the type of people we are if we say one thing and do another and by extension allow others to practice this. In Switzerland governments have to adhere to the will of the people via direct democracy. I don’t know the ins and outs of it but people apparently have a say if they wish at all levels of governance. An overhaul is needed of the entire system..
Correct if 100000 people reject there ideas they hold a referendum .. That’s real democracy .. The the communist. Shit there shoving down our throats in ireland .
Jayo, I didn’t recognize the previous governments, the last “GE” was simply going through to motions again. There is no party structure in Ireland , they are all the one party who work off each other, they put their cronies into position and repeat the charade of elections, which are a prosperous time for the “parties” because of campaign donations and new positions which become available. Its has been like this since the 20′s. Democracy in Ireland is an illusion and when our PPS data becomes available to the corporate world you will be only as good as your production and consumer value. We will condemn future generations to be fiscal pawns by willingly handing over our details to a corporate database to be capitalised on.
“Ireland will miss its bailout target of cutting its deficit to 3 per cent of gross domestic product (GDP) by 2015, according to Goodbody Stockbrokers.” Irish Times, 2012
I wish they’d make their minds up.
BC, you have it in a nutshell. Various posters on this forum seek to lash us for “voting in these people, and we therefore get what we deserve”. BS. The last election was a “get them out election”, as I have said before – a troupe of baboons could have been elected, such was the ire of the populace against the former Government. Both Fine Gael and Labour campaigned on an absolute tower of falsehood and mendacity, and when elected, proceeded to do the opposite to every item in their manifestos and their campaign pledges. I think it is unfair of people to criticize voters for assuming that they were dealing with honourable people, and voting accordingly. The voters were lied to and misled, the fault does NOT lie with them. If your word means nothing then you are the lowest of the low – this remark is directed to our ‘political masters’.
Making false promises. Sure isn’t that what you do at election time??
All we need to do is cut the cost of living, lets reduce the cost of accountants, solicitors, lawyers, doctors, consultants, pharmaceutical industry etc
It will reduce the cost of living and put more money in our pockets
If you added teachers then you’ve just listed all the occupations that get elected to the dail.
Cut the cost of living. Okay fair enough but how is that possible?
We are in a euro currency that is dependent on market fluctuations across the union. We have no control over how it works or is valued. When we buy raw goods such as oil it is bought using euros but is converted into dollars as everything does on the international markets. If our exchange rate is good we can buy cheaper oil, but our exports suffer because our products become expensive. If it is too low and we buy oil at a higher price and our products get more expensive. If we cut the cost of the range of services provided across the sectors by a nice rounded figure of 10% and oil goes up a few percent it wipes out that cut. I am not an economist and there will be clever people that will correct me I am sure but oil and the rise and fall of this commodity over the next few decades will spur boom bust cycles of it’s own anyway.
When I say “we.” I mean Ireland. The best we could do to reduce the cost of our own economy was the jobbridge scheme that gives free workers to various sectors and lowers the overhead costs of companies here. The euro was a big mistake.
@ Pól I thought it was clear, cut the cost of the professional services, that impacts on the cost of everything we consume
Great idea Pol. Let us now strive to have at least fifty per cent of the working population donating their labour for free and we will have a fantastic economy. Would you ever go and shite and don’t annoy me.
Wow what a ringing endorsement “economic growth beacon”, things really are turning around. I hear a little tiger cub purring….
Even i gave that a thumbs up
The celtic kitten! I might go buy some property!
Phil Hogan was the Minister that set up LPT and Irish Water, it was the Government that imposed these charges, so sending Phil to Europe doesn’t let this Government off the hook.
Growth beacon. Some laugh. I can already hear people getting cocky saying how we’ve turned it around and are now the only ones in Europe that know what we’re doing.
If you had two investors who both invested €100,000. A year later A has €105,000 and B has only €10,000 left. Another year later A has €106,000 and B has €12,000. B has achieved 0.1% growth that year but A has achieved an impressive 20% growth. Who is the better investor? Ireland’s growth looks good now because we did so terribly for years. Please look at the big picture and calm the f**k down.
There is no big picture. Health system big fail will cost billions to build a workable affordable not for profit system.
Housing big fail Working people with families are homeless because it is no longer affordable to rent or buy no regulation and no new social housing. Education a big fail primary education still church run.
The three basics have been dumped by the wayside to pay unsecured bond holders.
What will they do with the extra 1.6billion that is already been collected for water services?
interest payment on the bank bailout part of our loans is reckoned to be 1.6bn. This is why they need to charge you for water twice.
The Government has destroyed any hope for growth in the real economy, the one that matters to the ordinary people. Those that believe in trickle down economics are either idiots or belong to the 1%. The water charges need to be defeated and this Government kicked out, we have seen enough examples of cronyism,corruption and hoarding jobs for the boys. The only qualification that one needs in this country is a blood relation or in law of the political class. FF FG or labour it really makes no difference.
Spot on joseph
I was/am unemployed and started self employment under the back to work scheme..nothing fancy..welding repairs,light engineering..just coming into yr 2..and everywhere i look trying to drum up a bit of work all i see is people have no disposable income..and with the water tax its going to be even worse if it was possible to get worse…maybe certain regions /job sectors are improving ..but here in the southeast the local micro economy is dead
I presume Min Noonan put the finger on Goodbody’s to release a “good news” story to offset the “bad news” stories released by the in the Fiscal Advisory Service and the European Central Bank.
This can only be good news for the average taxpayers. I can see the headlines the morning after the budget:
“USC slashed to 2%”!
“Top rate of tax to kick in at €40,000 for a single person and €50,00 for a couple”!
“Top rate of tax reduced from 41% to 37%”!
and then I woke up and it was all……………
Goodbody’s have been misinforming the public for decades with their pre budget analysis that just happens to mirror the views of the Dept. of Finance time after time.
The truth is we have already cut way too far and the last couple of budgets have only inflicted more economic damage that will further delay any real recovery. FG/LB first budget if not their second budget should have curbed austerity and began the stimulus which would have put the brakes on the recession. By continuing to cut (hack) into pretty much everything we have dipped further into the mire than was ever necessary.
Of course we’re not alone, the austerity strategy was formed in Europe and implemented at some level by almost every member state. But Greece, Spain, Portugal, Italy and Ireland have been forced to cut more than most. This has had a knock on effect to even the strongest economies in the EU as demand for luxury goods plummeted around the Eurozone. Ireland would probably be struggling in this climate even if we didn’t suffer the very worst of the banking crisis. But we did.
Goodbody’s and their ilk should have been making these calls three or four years ago. Instead they continued the government cheerleading as austerity ruined our economy and everything it touched.
putting the brakes on should have been implemented three or four years ago.
I have no confidence that this country can recover from this economic crisis. “Recession” is the wrong word. We are BANKRUPT. And it will not be rectified for ONE single reason: The people that run the country are not intelligent enough to deal with it, lacking the necessary financial expertise and vision to do so. I’m grateful that we have skilled experts in Brussels to sign off our budgets, imagine the chaos if the muppets in Leinster house were left to their own devices. The Irish are the drunken teenagers of Europe, and we are treated accordingly by the E.U leaders.
We shouldn’t forget that forecasters such as Goodbodys never saw this recession coming, or refused to acknowledge it.
In the Fiscal Advisory Service we have an impartial voice to act as a check on government greed and idiocy in annual Budgets. Please don’t dismiss these warnings – we still need to make cuts in order to get back into the black.
“Goodbodys” the unelected and unaccountable body who loves other peoples money.
The best way to balance budgets is to grow. Austerity and only austerity breaks the functioning economy. Look at most of Europe, dying a slow death.
We are growing reasonably well because we trade so much outside of the Eurozone.
The more economic distance we can put between ourselves and it, the better.
Sean Armstrong
You are spouting ‘household budget’ drivel – doesn’t work at the +macro+ level of a whole country.
The Government sector is +not+ just another ‘household’ but bigger. It can +only+ stay ‘in the black’ (in budget surplus) if the NON Gov sector (that’s us, muppet) stay ‘in the red’ – by balance sheet ‘accounting identity’.
Of course, the Non Gov sector does comprise two sub sectors – domestic and foreign. But a net export surplus, for all countries, in perpetuity, is both a mathematical impossibility and a rather unwise thing to try to do to simply sell off all your +real+ resources (that you need to live, as we can’t eat money) for nothing ‘real’ in return.
And obviously, net export surpluses, with their required balancing net import deficits among other countries is a simple ‘beggar-thy-neighbour’ strategy. The top few percent elites can work this to their personal benefit, but for the rest of us, well, we lose, sooner or later.
This is why the Eurozone is in such a mess. We cannot all be net exporters in perpetuity, without some being net importers. (Given that much of our countries’ trade is within the Euro zone itself – supposedly a reason for a common currency in the first place, enhanced trade…) So, it falls apart in acrimony at the first downturn… except the elites can still profit from it all by dumping the inherent imbalance on ordinary citizens.. eg the bankster bail outs.
This is ‘Sectoral Balance’ analysis – using ‘accounting identity’, not the neo liberal intellectual fraud of Goodbody’s, the IFAC or the rest of the mainstream shills for the establishment who coudn’t care less about ordinary citizens.
So, getting back to our original domestic budget question. In the long run, our trade balances will need to net to zero. Which means that if we want the domestic non-Gov sector (us!) to be able to accumulate net financial (money) assets (savings, net of debts, in aggregate), then the Gov sector must accumulate balancing ‘debt’ – to the Euro cent.
And this is precisely what the historical data shows. In nominal terms (actual Euros, Dollars, Pounds etc.) Gov debt continues to grow perpetually, as it should to allow citizens to net save & the economy grow in both money & population terms, AND, vitally, for their to be ENOUGH MONEY CIRCULATING to PROVIDE the SPENDING NEEDED for (near) FULL EMPLOYMENT. (And because all these currencies are ‘fiat’, created from thin air, with Gov/Society as the ultimate +issuing+ authority, the Gov sector does not even have any ‘monetary’ need to offer deposit facilities – what the Gov ‘debt really is – to net spend in perpetuity.)
AND… we citizens should want Full Employment because labour (us) are ALWAYS better off when the maximum number of people works & earns, and we MAXIMISE our capacity to produce the ‘real’ goods thatr make our lives ‘better’ (whatever way we want to define that).
The people who DON’T want full employment are the top few percent – the Capital owners (with their paid lackeys), because THEY PRODUCE NOTHING AT ALL in ‘real’ goods (relative to the MASSIVE share of real wealth they take).
Their game is taking their share OFF LABOUR. Suppressing the returns to labour by mass unemployment, which in turn degrades wages and employment conditions, in order to maintain or increase their wealth and power is the Modus Operandi of Capital owners – the elites. (The ‘costs’ of unemployment benefits etc. are always borne by Labour, because, remember, Labour is the only group that effectively produces the ‘real’ goods we need.)
Paul McCulley (former MD of PIMCO, one of the world’s biggest Investment Funds) explained the above quite well as the directly opposing forces of ‘Democracy’ on the one hand and ‘Capitalists’ (Capital Owners) on the other, in a talk he gave at David McWilliams Kilkenomics Festival in 2012. It’s on Youtube. Go watch it.
When the likes of world famous billionaire investor Warren Buffet is telling you… “… it +is+ a Class War, and my Class has won…” I suggest if you aren’t one of the Capital Owners, or their ‘landlords agents’ of the current political classes… you should pay attention and get out on the streets (or some other mass +peaceful+ action) and DEMAND THAT ‘DEMOCRACY’ REPRESENTS YOUR INTERESTS, as it should, because it sure as hell doesn’t now & hasn’t probably +ever+ to much extent.
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