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THE ECONOMIC AND Social Research Institute is recommending the Government press ahead with its full of €3.1 billion package of taxes and spending cuts in the upcoming Budget. That’s despite both unions and business groups calling for the coalition to ease-off on the measures in recent weeks.
Making its twelfth medium-term outlook for the country, the think tank says the adjustment is the best course of action, however the economy fares in the next few years.
It sets out three scenarios for what could happen in the Irish economy before the end of the decade:
According to the ESRI, the €3.1 billion adjustment would be necessary even if the recovery scenario proved correct, as failure to implement it would “still leave a need for some cuts at a later date”.
In the case of ‘stagnation’, it says: “the failure to make the adjustment in 2014 would leave a very big adjustment to be done in 2015 and 2016″. If the delayed adjustment scenario plays out, according to the think tank: failure to bring in the planned measures in October’s Budget “could both prejudice a potential recovery in the economy” and could also “result in increasing the debts of the state”.
The ESRI also warns that labour market policy must ensure there’s no repeat of the persistent long-term unemployment the country experienced in the in 1990s, and says that a recovery in output over the rest of the decade must be “reflected rapidly in a reduction in unemployment”.
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The same ESRI who didn’t see the crash or didn’t want to see it.They have major credibility issues imho.
They said a bubble existed in our property market prior to it bursting.
They actually did see the crash coming, they were ignored!
See this from 2000: https://www.youtube.com/watch?v=THWbrFy5NWM
This is the same body that forecast a “soft landing” for the economy when the property bubble burst! Credibility nil!!
No credibility simply and group compiling numbers for government to use or ignore headed by ex FG Taoiseach son.
Economic forecasting exists to make astrology appear credible.
That’s not John Fitzgerald…That’s John Hurt, ( In more ways than one!)
We went back in recession when the property tax was introduced cause nobody had money to spend. Push ahead with more taxes and what so you think will happen? It doesn’t take a rocket scientist to know that by taking more money out of people’s pockets the less they have to spend and the result of which will lead to more job losses, more repossessions as bills can’t be met. How about stagnating the budget and allow the people to find a common ground and sound footing to get back on top of things instead of hitting them harder and harder.
So the fact that a large portion of ESRI funding comes from the govt has nothing to do with this? Just like the time they pulled the report showing some ppl better off on welfare when govt expressed concern. Can hardly be considered an independent think tank.
Seems as if the only non-austerity country, Germany, is also the only successful country. Are we only saving money / paying higher taxes, contributions, interests to support the State suppressing us or do we use our democratic power to start investing that money in creating growth and jobs. Why counting on someone else’s growth and not creating our own?
€3.10…we’re grand, I got that covered!
Damn, you got there ahead of me
No wait…i read on….sneaky buggers added in billion further down. :(
You beat me to it
Too late.
We accept your guarantee.
Don’t worry Matt, I knew you were paying back under David Drumms T&C’s.
Aaahhh Daragh – I see you changed it. – Where exactly did you study Journalism?
If the ERSI people are so cleaver how did we end up in this mess in the first place ?? They didn’t forecast the boom to bust !!!
As shown above the ESRI were warning about problem in our economy for years but nobody wanted to listen (and that’s not just the politicians by the way).
Prepare to be ass blasted !
Prepare? It’s a permanent condition!
I think it’s time for the ESRI to be closed down & Prof John Fitzgerald sacked.
What they are putting forward here is more ‘growth fairy’ nonsense pretending that the net spending of the government sector has little or no effect on the economy or GDP. Contrary to what the IMF themselves are now in fact ‘shouting’ (in diplomatic speak).
Spending +IS+ GDP ! And government spending is just the same as non-government spending.
What Fitzgerald & his fellow ignoramuses & wasters are saying is that if the Government cuts net spending into the economy by €3.1 billion then the private sector will suddenly start spending this amount or more. ie when citizens are losing or afraid of losing their job or income, they will splurge out.
This rationale – seriously, this is the formal economics ‘thinking’ of the ESRI – is that citizens will be so relieved at €3.1 billion less on the future government debt burden that we will dig into our savings or take out new borrowing to spend this and more.
So, everyone? Are you feeling it? Feeling the love from the ESRI, our government, the troika, the banks, all the rest, so you’re going to go out & splurge?
Because, well, me, I’m not.
I don’t think, as was tried & failed in the 1930s that we get out of a recession by cutting spending & increasing unemployment & emigration. Nor do I believe that this will make our total debt any more sustainable.
I don’t believe prosperity comes from the enforced unemployment of over 15% – likely more in reality – of our available workforce, for a decade or even longer.
I think Fitzgerald & his ilk should resign forthwith. And we should hire some economists prepared to tackle the deeply flawed ‘straight jacket’ & totally unnecessary economic vandalism of the shared currency – a fiat currency that by banking operational reality is ‘endogenous’ and by definition (fiat, keyboarded) cannot ever be in ‘short supply’ to hire available resources to produce wealth in goods and services.
None of this sh1t is necessary – at all. Recovery should have taken no more than 3 or 4 years absolute maximum.
MMT economists of the Post Keynesian school correctly understand macro economics & money & show the way.
Im not a fan of Fitzgerald either,but we know what you think is stupid and unnecessary,now maybe you can tell us what is not stupid and what exactly your alternative is.
Richard
If an individual does not have spare money to spend they stop spending.
Increasing taxes lowers an individual’s ability to have spare money to spend on good & services.
The ESRI are proposing increasing taxes, which will ensure more and more people will have less and less to spend. That is basic Economics.
The alternative would be to leave taxes alone or better still lower consumption taxes (VAT & Duty), which results in goods and services being cheaper, which encourages spending as the goods are cheaper. Again basic Economics.
Exactly my sentiments,its all too easy to see what is wrong and what has to be done,but with politicians its not so straight foward,because they are afraid of offending some group or other they rely on for votes,by trying to please everbody, which is an impossibility, they end up making bad sitution worse,but politics have always been this way and i guess its not going to change anytime soon,even for a country in bailout mode.
ESRI could not tell the weather never mind an economic forecast.
Suggestion- sort out social welfare.
Think-tank? The ESRI is a quango where ‘economics’ experts get paid large salaries out of our taxes to support the government line.
People on chairs making a lot of assumptions there on what will happen. Do they have any proven track record on this to allow them to make such calls that will have a lasting impact on Ireland? Or are they just guessing?
Sad sad to think this shower is handing out advice to already dumb ministers !!! Really frightening when austerity has now been proven to cause damage yet these numptys think they know better !!!!
they know d##n well what they are doing -. this type of BS is what is expected of them .
A working population paying high taxes on their work in order to keep the rest (almost 500000) afloat, is not a happy population
I know 188 isn’t much and is tough to live on but at the end of the day it’s free money that somebody else is paying for in tax after a hard weeks work
Not feasible I’m afraid n going to get more n more tense as taxes increase
John Firzgerald looks like a hunger striker
These overpaid government monkies wouldn’t know a recession yet they can bring misery on others by recommending more cuts and taxes, and claim its for the greater good. Government quango lapdogs
With the ECB already telling people that the rates won’t increase above what they are now, but may go down, it’s pretty safe to assume that it’s going to be the stagnation option; after all, look at the governments track record with reform so far, definitely not going to be any progress there. Then don’t forget the next bailout the banks are going to need in 2015.
Great fun all together!
The ESRI can feck off.
after 5 years of harsh budgets , we are still in the same economic position (no actual scratch that , we are in a worse economic situation ….especially domestically ) , another budget of this type will result in a total collapse of the domestic economy .
Property-developer tax
Chemicalised water charges
increases in home, health and life insurance and car insurance for women.
increases in food , mortgage rates ,
etc etc etc etc etc
down down down we go ………..there is no bottom to this .
Yep way to go ESRI
ESRI must stand for Economically Stupid Regarding Ireland
Most people understand that when debt levels rise above their income, the only way to deal with it is to cut spending, taking on extra loans to make up the shortfall is just adding to the debt problem,not solving it,in the same way increasing the tax burden will make the problems much worse not better instead of the cutting spending,but when have politicians ever taken the long term intelligent option over short term gain.
“Most people understand….blah, blah, blah…..”
Yes, most people incorrectly, as you do, conflate the macro economics of a whole country with the micro economics of a household. They are in fact +opposite+ in many important respects.
In macro, someone’s spending is someone else’s income, and someone’s saving means lack of income & employment for someone else. A household could care less about these ‘others’. In an entire economy they are all vital important.
The current mess is the result of the same mistakes made in the 1930s before Keynes ‘macro’ understanding changed the policies (albeit grudgingly by the same elites who prefer as little role for governments as possible, including & perhaps especially any vital ‘counter cyclical’ role).
‘Paradox of Thrift’ – go look it up !
The way out of this mess is to restore (near) full employment. Solutions to everything else, including debt, will automatically. You don’t get out of a hole quickly by cutting the spade in half.
your last paragraph is it in a nutshell…if this slimy government even carried out the first promise of their 5 point plan, just the first point nothing else we would have been a lot better off then we are now…employment is the key to everything
Why is it only €3.1bn? Can they not cut current expenditure by more (see McCarthy report) but offset the economic effect by investment in capital spending (with the best cost/benefit outcomes)?
That sort of compromise doesn’t make economic sense…. There lag between capital spending and its eventual positive effect on economic growth is too long for there to be a meaningful offset as you are envisaging
Kook
You’re obviously talking about the loss in Government revenue from VAT & Duty which will be lost from the people running their engines while queuing 1/2 hr. to get through Newlands Cross, once the free flow upgrade is complete.
Forgetting all about the savings to business & private drivers from the same, plus increases in air quality to residents in the area, plus decreases in traffic accidents.
Isn’t it nice of the people in the ERSI, whom are paid multiples of the average industrial wage let alone the minimum wage, calling for tax increases!
Easy to see which £ucker$ can still afford to pay more.
We need to stay the course. Make the cuts. Finish this now.
yes O’reilly thats it, cut away…did you ever hear of the law of diminishing returns….we break our necks to satisfy the europeans while our domestic ecomomy grinds to a halt…did you not see the latest tax take figures, does the VAT take being down not give you a clue…….the only thing that will be finished now is the country
what you and your pro government friends fail to understand is that no amount of cuts will get us out of this mess, no amount of austerity will solve the problem and do you know why…austerity only works if it is accompanied by structural reform and that means making changes from the top down…our politicians are in the top three highest paid in europe and they will not leave the gravytrain instead they will keep cutting and keep taxing us into oblivion
Weirdo, you obviously never heard of sustainability or Debits and Credits. In terms of getting our spending in order, we are nearly there. Why stop now? Doing so might create a temporary boost but that would be just another bubble. Do it now and be done with it. You want to spend money we don’t have…
O’reilly
enda kenny said a long time ago
you cannot tax your way out of a recession
he was dead right
economics 101 the law of diminishing returns
you are looking for a short term soloution to a long term problem….you can have all the austerity in the world you like but if there is no structural reform its just money down the drain…read the leaked bundestag report…the main reason the europeans are not confident in the irish is because they do not trust our government to make the structural reform that is needed….they know that irish politics is riddled with pigs who just want to fatten themselves….
I wonder what Professor Fitzgerald’s salary is that he wants continued austerity for the rest of us….
O’reilly ,
I think the last sentence of your post should read “YOU WANT TO TAKE MONEY WE DON’T HAVE ” ,
thats it FG ,go ahead and obilitorate the domestic economy , see how far that gets you .
Muppets
This of course means that public sector workers will have more than 6 months before their next pay cut?
have your say