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THOUGH MANY may be happy with the Government’s deal on the promissory notes simply because it allows the final death of IBRC – the former Anglo Irish Bank, an institution few will mourn – most people will simply wonder how the deal impacts on future budgets.
Well, the news is that the deal won’t make much of an impact on this year’s Budget – that is, the taxes and spending in place for 2013 – but it will ease the burden quite a bit in the Budget coming this December, for 2014.
The graphic you’ll see below (which you can see in full here, if you need a larger version) is from the Department of Finance’s technical briefing this evening, and shows the effect for this year’s Budget and for the next two.
The ‘GGB’ figure are the very top line is the deficit the government currently expects to run (that is, without introducing any new policies and simply leaving the law as it is for another year). These figures were most recently updated in the documents accompanying Budget 2013.
Underneath that is a list of the impact caused by each measure.
In order, here’s what each line means:
The end result is what you see at the bottom – the effect for 2013 is negligible, but for 2014 and 2015 the Budget changes can now be €1 billion softer.
Unti today, Budget 2014 was required to find adjustments of €3.1 billion – with €2.0 billion in spending cuts and €1.1 billion in tax increases. This adjustment could now be significantly watered down without hampering Ireland’s ability to meet its deficit targets.
Similarly, the adjustments for Budget 2015 were to include €1.3 billion in spending cuts and another €700 million in taxes. This adjustment could be almost halved and the targets could still be met.
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Well explained.
Well that’s got to be good news.
Kenny just passed the book onto the young people. I’m 28 and my generation will be saddled with this shit. There is no accountability, none.
I dont get it, wont we stillhave to pay billions in 20 years so dont we still have to save/stash some cash towards that, or are we just taking a “well cross that bridge when we get to it” aproach?
I hope everyone’s gets involved in tomorrow’s protest, it’s time to get off our computers and stand together, we all have different views but I think we can all agree we are not happy! So let’s show them, it works for the French!!
KerryID, don’t you mean “We’ll kick that can when we get to it” :-D
If any of you believe the above good luck to you. Many economists over the last few days have said there will be absolutely no change in any future budgets, so who is lying?…..I don’t believe a word from Noonan and less again from FG and any LB party….spinning and you’re all waiting to spin by the looks…
Well explained????? ok if your studying figures, economics and statistics but to people like me who left all that mumbo jumbo back in school its all double dutch. There is an arrogance out there about reading these economic garbles. If you say oh I don’t understand it those who study these things assume the person is of some limited education and that its simply above their understanding. Nothing is further from the truth. Can the ordinary person hold a conversion with a neurologist on the workings of the brain? NO they cannot. Yet we are all expected to Know this treacherous cut throat knowledge about how to cripple a country with Austerity the same as if it was the weather we were reading about. Maybe someone should Write a “for idiots” version for people like me who would prefer to learn off the Genealogy of Christ rather than have to trudge through this meaningless technical finance speak whose only purpose is to confuse, bore and numb any truly intelligent person.
If I hear the expression “kicking the can down the road” one more time today, I believe I’ll scream like a lunatic and pull all of my hair out. How many times can one cliche be used in 24 hours????
We didn’t kick that expression like the proverbial “CAN DOWN THE ROAD”
“kicking the can….”ah only joking.Chill there’ll be some other crisis poping up to take our minds off it.
Yeah, fair nuff! I’m a bit tired and emotional after prom night!
that can is so kicked down the road i cant even see it in the distance anymore
Tip the can, I see Ruiri hiding behind the bar #prom night :)
Who doesn’t love cans?
Sup laydeeez!
ll cool Adebayo
6xDutch Gold for everyone….on me :)
No Heinekan?
WTF Norman this is a double dip recession Hieni’s are too expensive :) it’s Dutch gold until 2053 or all prom notes and bonds are paid in full.
I’ll have to revise my tastebuds downwards so feck!
no karpackie?
Can your run down the road with it to me Ryan O
The road is moving under the can…
Kenny just passed the book onto us young people. I’m 28 and my generation will be saddled with this shit. If anything, this is merely kicking the can down the road by Kenny’s administration. There is no accountability, none.
And exactly how will it affect you? Regardless of this deal, our requirements to borrow just to keep the lights on hasn’t changed. You were born in to national debt. And it’ll still be there when you die. It’s a bullshit argument…
O Reilly, we may have been born into debt, but correct me if im wrong, but the debt we were born into was money that was borrowed to run the country and NOT for converting private banking debt into sovereign debt. I mean seriously, are you so blind that that is not clear to you?? Orr are ya trot out the usual FG party line on this.
Secondly, I dont believe we have EVER been so indebted either.
O’Reilly… Back in 2006 the national debt was c32bil.
Joesph, what part of the fact that this debt was nationalized do you not get? Now you can continue to jump up & down about it or you can deal with it. It’s been dealt with. You can stop jumping up & down…
And it was 30bn in the 80′s and 90′s. So it never got paid, just rolled over. What’s your point?
^^^lap dawg^^^
Woof woof wo’wo’oooof woof understand that Orielio :)
Stop jumping up and down??!!…….nah, i dont think so. Maybe you’ve lain down and accepted the huge injustice thats been lumped on us, well good fer u. I haven’t nor will i EVER.
How do you feel about yer leaders having lied their asses off to get elected? I suppose ya think that’s acceptable too………………………………………………God give me strenght
O Reilly the debt is now 167 billion,whilst what happened today i hope is good for us.The full debt its hard to see it been sustainable unless something tangible is done.
Point is that national income increased to a point where surpluses were possible … The debt could have been paid down. 2013… Interest only is the best we can hope for.
Ryan, you must be sick to death of the positivity of today. You must be raging this gov managed to get a deal done. Yet you’ll probably benefit in that your social welfare may avoid future cuts…
And your never accepting will achieve what? There’s so much of this BS out there. Move on and get behind recovery. Or sit on your ass and bitch. I think I know the option you’ll choose…
O Reilly,,,the ultimate YES man
plonker
Yeah, you stay angry Joe. Rail against the injustice of it all. The rest if us will get on with it.
Joe, the ultimate doom merchant.
Anglo debt is not our debt O’Reilly. Do you think that’s fair and equitable???
SMcB
Carful now, oreily will call you a dole head and might hurt your feelings. Also his positivity might make you go blind, wear shades when chatting with the yes men and have a bucket beside you for their bile :)
Hey O’Reilly, I hope you’re just as smug when your beloved FG party are in the wilderness for decades after this, Or better still disbanded. The downside to shafting the young is they will be around long enough to bury you and your like through the ballot box. Now run along, Im sure Edna needs more tea.
Ronan, i’d say tis probably a lot more than tea that O’Reilly is giving Enda
So Ryan, your one of those highly paid civil servants bleeding us dry?
SMcB, the debt was nationdlised. It became our problem. We’ve now got a deal. You’d still be knocking on ECB door asking for a write down…something we were never going to get.
No Reilly, I’m fairly sure that Ryan is not a politician…………………
Stop talking nonsense O’Reilly… The fact you can’t contemplate that Anglo, as a bankrupt bank, is costing the state c31bil worries me. Please tell me you that understand that fact.
I work for MI 131 :) special advisor to Enda Kennys teddy bear. On 345K per annum + 79k in expenses another 15k unvouched expenses. 167 days paid holidays a year, health, dental, dry cleaning. I have a driver also because I’m sooo important I can’t drive myself. Multiple European property’s (a portfolio if you will) and I’m just about to get the mrs in the back door if you know what I mean :) Minted, living the dream don’t ya just hate me
Anglo was never a systemic bank. Despite the nonsense that the Gov at the time thought. They didn’t even have an ATM network. FFS. And as a taxpayer, I’m asked to take on their debts, as a private bank??? Sorry O’Reilly, but you’re talking scutter.
Greece defaulted 4 times so far and their lights are still on so I think the bullshit is coming from you
No solutions, only ad hominem.
Demagoguery lives on now and forever
Back in 1992 I was born with thousands in debt from the 1980s. Debt that I had never benefited from passed onto my shoulders. My generation was also born into debt but did we ever feel any austerity from it?
No, instead the economy grew, inflation kicked in and smart management from the NTMA meant that the debt was more often rolled over instead of paid back in full. Even today a lot of our debts can be traced back to the 1980s despite many repayments during the Tiger years.
it’s a damn good thing we are not all like you O’Reilly, democracy would be dead and gone….
It was NOT 30billion in the 80′s that shows your level of knowledge O’Reilly, You are all talk, in the 80′s our national debt was an unbelievable €200Million Irish pounds.
Billions is a new phenomena of the 00+ economies, do your research before spitting out garbage….
Agreed Joseph….some people are born teasers and followers…..
As far as I am concerned we all witnessed a financial coup d’état, well orchestrated by FG, Labour and the ECB.
A twist of the arm to turn the debt from an objectionable IOU to a unchallengeable legal binding sovereign debt…. well done as I was our only playing card left.
Here one for you an English newpaper
This morning stated that allied Irish bank has been liquidated
You can crunch it up however you like, but the bottom line is they’ll now only (only!!) have to suck €6 billion rather then €7 billion out of us over the next three budgets. It’s like one of those questions little boys ask: “Would you rather die by being thrown into a pit of poisonous snakes or being eaten by a giant spider”.
And of course while they suck this €6 billion from the bones of what’s left, the plan is to also increase jobs and grow the economy. Oh yeah, cos that’s how it works.
You just nailed it sister!
Hold on now. Has Pearce Doherty reviewed these figures?
haha nice one.i can picture o snodaigh beside him with one of those giant pound shop calculators
If you’re going to have a go at least spell his name correctly
I tried to double like that comment.
By the time these bonds mature they will simply rollover into some other form of payment assuming that they are even still around. Chances are that in forty years time most European debt will have been federalised in some form of a banking/political union. And even if they are still around inflation over the next forty years will take a lot of the sting out of the amount.
If you think about prices in 1973 (forty years ago) you can see how much inflation has made a difference in that time period. The average industrial wage in Ireland today is around €41k (according to a Journal article from last September). The average industrial wage in Ireland in 1973 was €1.5k. So if you owed €1.5k in 1973 you owed roughly a years wages. If you owed €1.5k in 2013 you owed around 2 weeks wages.
Now it’s not as simple as that as there is interest to be taken into account as well. But the base amount in effect will be diminished by inflation. What is a collosal amount now will be considered much smaller in forty years time.
That may or may not be so Jim, what is so is that while the promissory note remained there was a possibility of a write down on what, after all is not our debt, now the Irish Government has accepted the debt and we are going to repay the whole amount as this Govt. almost seem to have taken pride in promising from day one.
This is not a good deal for us.
Ruairi i taught i was the only one .. The fact that people keep using it cleary pointing out that people have no real opinion just copy and paste comments
Kicking the can down te road
Making our children pay
Traitors
Not our debt
Bla bla bla
Jay if soneone offered a reasoned opinion as to why this is not a good deal would you slate it or at least take it on board.I have seen alot of commentary today from both sides of the debate and honestly i agree some from both side.But most posts are political sniping depending on party alligence.
Of course i would take it on board i dont have party alligence but i feel this is a good thing. The only people who seem to be oposed are the ones whos only alternative to this deal is to pay nothing end off .. Youll have to finter through hundreds of comments on the promissory threds today to find an opposition comment with any substance that dosent contain the word traitor or children or kicking of the imaginary can
Jay i believe we should have sought a writedown.The debt would never have been wrotedown thats a given thinking otherwise was naive.The debt was 31 billion if 4 or 5 billion was wrote off it might have meant a bitter pill for a lot of our people would have been slightly easier to swallow.But a writedown was never sought,as you know if you don’t ask you won’t get.
I meant we would have not got a full writedown but we should have sought some monies off the full amount.
Norman just because its spread out longer dosent make it any more sustainable just easier to pay i belive a write down is on the cards just not for another couple of years we all know how politics works nothing the government has done to date will be enough to secure a second term the only thing that will is a write down and regardless of what the people on this sute think the government arent just looking for thw fat cat pension they also want the second term
The debt should be fedralized its alot easier to spread the debt over 300 million than 4.5 million but the stumbling block will be Germany(i’m not anti German)they will not allow retrospection.
As much as hate saying it a default will happen it will be managed and not called a default but it will still be a default.
1.8 million workers can not service a national debt of 167 billion plus over 30+billion private and household debt.
Jay I would not say its a good thing, rather paraphrase Churchill. Its not the beginning, nor is it the end, but it may be the end of the beginning.
The problem with feetilizing it is it would have to be voted on and they (the people of these countries) would never agree to it just like we wouldnt if it was another country in trouble. the only time that we will get that is if the country starts getting drastically worse and it will leave europe no option but to do a write down just like in greece . The problem we have is we are out performing all other default countries so it leaves us with not enough cards to play against the ecb,imf…
We are still paying a bill that isn’t ours. end of.
My 10 month old girl would like to say thank you for lumbering her and her children with this massive debt .
Will this affect the price of wine?
Lol smoke and mirrors bs from the government, extend out the example above to period after the promissory notes would have been paid and see what the savings are then. We’ve been sold down the swany!
At last some imagination! “Sold down the swany” is one we haven’t heard today! ;)
How can they not know the potential loss to NAMA? I thought this was all worked out when this stress testing was done? Is that not the reason we pumped more money into the banks for liquidity? So if these losses are circa €1billion or so, we’re no better off are we?
Can anyone (maybe journal staff) explain why did it cost about 10% admin cost to “pull together ” the cost of the prom note. It is madness, if you think of the prom note as a fund (hedge, pension etc…) which is the closest private sector equivalent I can think of, this would be between 0.3% & 0.6% so why did it cost dept of finance 10%.
Jay Thomson- The debt has been taken on by the government making it now a sovereign debt and as such can never be renegotiated.
I can’t believe we are putting up with this shit.
Money
The people of ireland sadden me, keep struggling for the next few decades ya grand, pay back this debt and Get nothing in return. Oh and guess what the Irish oil found off the south coast recently has been sold off to the big oil companies, well looks like we can’t do a Norway on it, but yano what we might aswell give all our clothes to the third world too along with our houses, money and our last few possessions like idiots then we sit back and brag about how generous we are. While the whole world is shtieing on us. And after all that is over and Ireland is left like a wasteland we emigrate, and work like damn good paddies, potato anyone?
Appearance is everything. Reality is nothing. Simplifying the deal, pretending that 20 billion is written off or reduced in cost, and that supposedly our national debt is now sustainable is what counts.
I can’t pay you but talk to my son in 40 years time. He will pay you.
The majority of the media are reporting this as if we got a writedown,but i’m sure when the euphoria dies down the veil will be lifted and the true realisation of what has been done will hit people.
I hope this was done with the best of intentions for the country and not as a political stroke to improve their electoral propects,but i suspect it may have been a stroke.
I suppose it will only make a difference to the budgets leading up to the elections, a shower of trickster’s the lot of them
How much of the saving will be used to bridge the gap between public and private sector?
Even it was €10 billion I doubt it could fill the gap between your ears
Future generations be damned. By the time my children are paying back this private debtor tax they will never have seen or heard of Anglo bank. Having said that in all likelihood they’ll be living & working abroad like so many of my current generation who will not be in any hurry to return to Ireland & who can blame them. This is nothing more than a glorified debt restructure. The Irish tax payer will continue to bear the brunt of shoddy political decision making, absentee regulators & professional bond gamblers. Just wait & see the reaction when all of the new unjust taxes are implemented in the coming months & the public really feel the screw turn – a saving of 1 billion per year will count for nothing as it will not be reflected in the ordinary tax payers take home pay. O Reilly – words can’t begin to describe what a loathsome pathetic creature you are in my opinion. I feel sorry for your parents as I’m quite certain nobody else would put up with a turd like you and I doubt you have much of a social circle beyond similar fg devotees.
I suppose I should qualify my comment as “Will this affect the cost of wine in the short to medium term”?
Hopefully any savings are wasted
I don’t understand what happened. Can someone explain using a household as an analogy with no hyperbole please? Genuine request.
Simon imagine your mortgage was too expensive,so you stop paying interest and principle.Instead you pay lower interest push out the repayment date but still owe the full principle at the end of the period.
@ Norman. Thanks. So no right to say that the net effect is we only pay more interest in total due to the extended term of the loan? If yes then it seems not so bad right? I had to do just that with an investment mortgage I have in order to keep my bast@rd head above water a few years back.
* “so no” should read “so it’s”
Yup a big giant balloon payment that still has to be paid…..great ‘deal’ innit. :D
Balloon payment is completely different to what Norman said. Which is it? Balloon also not a bad option as we can refinance at the time the balloon is due hoping we can raise money easier and cheaper.
Simon because of the length of time it nearly doubles the overall amount paid back.But if it means at a household level you can feed your kids and pay your bills then its ok.You hope come the end of the period your wages and disposable income are sufficent to manage the princple,the kicker is you’d probaly have to refinance the debt.But its about breathing space.
Its not a ballon payment,we owe 30.6 billion we pay none of the principle now interest only until 2038 when the first slice of the debt has to be paid,at least that is my understanding.
The promissory notes were like credit card debt ie unsecured. But the government in their gombeen short termist wisdom decided it would be better to pay 3% of 28 billion (840 million for forty years ie an interest only mortgage where 100% of the principle will have to be paid as a lump sum in 40 years time. Total cost 61 billion
Allowing for annual inflation of 2% for every year for the next 40 years the lump sum will be valued at 14 billion in today’s money.
Instead of paying 3.06 billion 28 billion at 8% for 12 years (approx 70 billion). The money being paid for the promissory notes was or was to be destroyed.
If you don’t pay your credit card they can’t really do much, but if you don’t pay the mortgage you loose the house.
In Spain the bank debt was transferred to the ECB.
In Ireland it was transferred to the State.
We could have refused to pay the promissory notes and their would not likely have been any serious consequences as it would be a default to a defunct bank. But now because the debt is owed to the ECB and the ECB does not allow default as any default to the ECB would be a Soveign default. While the payments may be less it means the ECB can come after us if we cannot pay. Our position is weakened. As our national debt is spiraling out of control we may end up having to default anyway so our politicians have made our position worse
Thanks. Doesn’t seem as bad as everyone seems to be going on about. Breathing space is good even if the debt is horrific. That’s life.
Balloon, can, note call it what you will…..we’re still paying debt that’s not ours. Yeoww delighted about this deal so I am……look it’s written all over my face :)
Using a household as an example: you take out a mortgage for 20 years, then you remortgage the house for 20 times its worth. You then work with the bank to change the deeds to your neighbour, who couldn’t afford it.
Last nights deal was to set up a deal that his kids and grand kids would pay it off over 40 years, and at the end you will own the house. The good news that the government was pushing on the radio is that now your neighbour can manage the repayments, and can now afford to paint your house once a year.
As it stands ,I had nothing to hand down to the kids,now,courtesy of the two right wing parties ,I bequest all my debts to the future generations of Ireland………….be grateful.
Hopefully the decimation of our beef industry thanks to the horse scandal will mean we have far fewer cows in the country.
The dramatic reduction in the national herd, by far the largest producer of greenhouse gases, will at least be saving our children from global warming.
So not all the news is bad for the next generation.
Great article.
These savings are depending on growth in the economy lest we forget. If the economy has growth of 1% less than forecast that will wipe out the savings. Also are we forgetting the origional prom nite bill was 31 billion but now it’s transfered to gov bonds we will end up paying 64 billion so me thinks a bad deal for us citizens is what we got.
The people of ireland sadden me, keep struggling for the next few decades ya grand, pay back this debt and Get nothing in return. Oh and guess what the Irish oil found off the south coast recently has been sold off to the big oil companies, well looks like we can’t do a Norway on it, but yano what we might aswell give all our clothes to the third world too along with our houses, money and our last few possessions like idiots then we sit back and brag about how generous we are. While the whole world is shi*ing on us. And after all that is over and Ireland is left like a wasteland we emigrate, and work like damn good paddies, potato anyone?
Everyone’s a bloody economist theses days, just like you were all property developers a few years ago. You are all state zombies who watch far too much rte.
Ry
Prom note hahaha
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