| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


How to use our RSS feed

Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.


Finfacts is Ireland's leading business information site and you are in its business news section.

We provide access to live business television and business related videos from: Bloomberg TV; The Wall Street Journal; CNBC and the Financial Times. Click image:


Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax 2008

Climate Change Reports

Global News

Bloomberg News

CNN Money

Cnet Tech News


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




Content Management by interactivetools.com.

News : Irish Last Updated: Apr 24, 2009 - 5:31:05 PM

Irish Budget 2009: Government estimate of 2009 deficit almost €15bn - before Budget changes; Houses of Oireachtas costs to rise 12.3% - up 61% in 5 years
By Finfacts Team
Oct 11, 2008 - 5:22:51 AM

Email this article
 Printer friendly page

Irish Budget 2009: The Government is estimating an exchequer deficit close to €15 billion next year before Tuesday's budget changes are taken into account, according to the Estimates of Receipts and Expenditure for 2009 published today.

The Department of Finance figures show that the General Government Balance (GGB), as per the Euro Stability and Growth Pact, will be in a deficit of €13.3 billion or 7 per cent of GDP - - more than double the annual deficit permitted by the rules of the European Monetary system.

In Tuesday's Budget, there will be tax increases, spending cuts and welfare payment rises. The allocation of €1.6 billion to the National Pension Reserve Fund for public pensions, si for example likely to be deferred.

The Economic and Social Research Institute said this week that the Government should aim to stabilise the General Government Deficit at 5.5 per cent of GDP in Budget 2009. This deficit level will imply that the Budget will be among the most deflationary budgets of the last quarter century. The ESRI said ideally, it would have been preferable for the Government to avoid adding to the downturn through a fiscal contraction. However, given the poor state of the public finances and the uncertainties surrounding the prospects for the economy, it said that the 5.5 per cent level is prudent.

Today's white paper shows that tax revenue is expected to fall under most headings next year with a total tax take of €41.2 billion by comparison with €42.4 billion this year. Only income tax is expected to rise and that is by a very modest €200 million. Falls are forecast in VAT, corporation tax, capital acquisitions tax, capital gains tax and stamp duties.

The Government's more lower deficit than a number of independent assessments, is based on the Department of Finance's tax revenue forecast for 2009 of €41.2 billion, which is up to €3 billion higher than other forecasts.

"The Government forecast for tax revenue is optimistic," said Rossa White, economist at Davy Research, who is forecasting 2009 tax revenue of €38 billion. White said the Department of Finance's estimates for the full-year 2008 tax shortfall could also be exceeded by the end of the year.

The Economic and Social Research Institute was the inspiration of T.K Whitaker, Secretary of the Department of Finance in the late 1950's, as he well understood the pressure within the Department, to produce politically convenient forecasts. 

The Estimates provide for a big cut in the National Development Plan programme with a decline from €8.5 billion this year to €7.8 billion in 2009. Transport infrastructure is projected to fall by almost €200 million to €2.5 billion. Spending by the Office of Public Works will fall by over €80 million due to the halt in the back-of-an-envelope decentralisation programme.

Fine Gael finance spokesman Richard Bruton said as recently as 2006 there was a budget surplus of €5.2 billion and now the Government was forecasting a deficit of over €13 billion for next year.

"This appalling €18.5 billion turnaround is due to an unsustainable growth bubble which generated revenues that couldn't last. The tragedy is that no value for money reforms were introduced during the period,"said Bruton. "Ireland now faces a very tough budget. The Government must avoid making matters worse by slashing investment or raising taxes, while focusing on long overdue reforms to stamp out waste, to rationalise an overblown administrative structure and to protect frontline services. Vulnerable sections of our community must not become the fall guy for years of Fianna Fáil's complacent management of public money," he added.

Labour Party finance spokeswoman Joan Burton said: "The fall in the fortunes of the Irish economy as reflected in these figures is the most rapid and severe in the history of the state. In 1997 Fianna Fáil inherited a modest budget surplus. When the leave office they are likely to leave behind the biggest deficit every seen."

"While the good times rolled, this Government never ceased congratulating themselves on their economic prowess. Now that they have finally admitted that the country is in a recession, suddenly it is everybody else's fault but their own," she added.

As usual, there is precious little detail or none, on departmental and agency spending budgets.

Finfacts Report: Irish Public Spending: Pre- IT/Web official policy prevails - hide as much information as possible from taxpayers

Houses of Oireachtas Costs to rise 12.3%
The authority of the Minister for Finance, in terms of sanctioning expenditure and staffing levels of the Houses of the Oireachtas, was passed to a new Commission in January 2004, under the Chairmanship of the Ceann Comhairle.

The new Commission approved an existing level of service estimate of €84.9m for the running of the Houses in 2004.

The expected cost of operation of the Oireachtas in 2008 is €122m and is forecast to rise to €137m in 2009  -- an increase of 12.3%.

The costs have increased by 61% in 5 years for what is effectively a part-time parliament.

New Zealand has a comparable population to Ireland's and a single chamber parliament. It has budgeted €56 million in its recent budget for running its parliament in 2008/2009.

Besides the costs of the Oireachtas, Ireland has 35 ministers - most of the ministers of state have titles and made-up work.

It's well for them that they can get away with fooling a gullible public.

- Michael Hennigan

At the annual Kenmare workshop for Irish economists, UCD economist Colm McCarthy and Rossa White, economist at Davy Research, said in a paper that auctioning off intangible assets such as commercial radio and mobile phone licences at their next renewal date should be part of Government strategy to reduce the worsening deficit in the public finances.

In the paper Fiscal Strategy and Economic Recovery, they also argued that National Development Plan (NDP) projects that would not contribute to future growth should be pruned, the public sector pay bill should match the actual reductions achieved in the private sector and the health and education sectors should be reformed, possibly involving partial State withdrawal.

White told the 31st annual economic policy conference that not only would the economy contract sharply in the rest of 2008 and 2009, but that the outlook for 2010 was "clouded", with the response of Irish banks to the financial crisis the key unknown factor.

"If bank lending to creditworthy businesses and households picks up, the recession will not be prolonged indefinitely, but that is far from certain,"he said.

The economy will decline 2 per cent in terms of real GNP this year, according to the economists.

"Next year, with strong negative carry-over effects and no firm reason to expect an upturn, the economy may shrink by a further 3 per cent in volume."

The public finances will continue to worsen, with the decline in tax revenue likely to be larger than in 2008.

Although there is "very little prospect of getting back to an even keel in a hurry", White said it would "matter greatly" whether the GGB deficit next year turned out to be 6 per cent or 8 per cent of GDP.

In order to avoid the State budgetary position adding to the economy's list of problems, it was important to get this deficit down as rapidly as possible, he said.

Finfacts Irish Budget 2009 Page

Related Articles
Related Articles

© Copyright 2009 by Finfacts.com

Top of Page

Latest Headlines
Ryanair revises up full-year profit guidance
AIB bank profitable in third quarter
Ryanair announces half-year profits up 32% to €795m
Ryanair benefits from improved customer service
Ryanair to buy 100 new Boeing 737 MAX 200
Finfacts server migration Thursday
State-owned Allied Irish Banks reports H1 2014 profit as bad loan charges plunge
Ryanair reports profit in its financial first quarter soared 152%
UK firm opens van dealership in Dublin
Ryanair reports 8% fall in full-year profit; US services to commence in 2019
Global Financial Centres Index: New York overtakes London; Dublin slips to 66 of 83 cities
Bank of Ireland reports “significant” improvement in 2013 results
Sale process of IBRC UK projects Rock and Salt completed
CRH says 2014 will be year of profit growth after reporting 2013 loss
Ryanair reports third-quarter loss
Irish Water says it saved €100m in setup costs
RSA Insurance fires two Irish executives for large loss/ accounting irregularities
Bank of Ireland will have to raise provisions by €1.4bn; AIB says it's "well capitalised"
CRH reports slightly improved third quarter
Central Bank says ownership of Newbridge Credit Union transferred to permanent tsb
Ryanair reports H1 profits rose by 1% to €602m
Dublin Web Summit: Irish Stock Exchange and NASDAQ OMX announce dual listing plan
Irish pension managed funds returned to growth during September
Dan O’Brien resigns as economics editor of The Irish Times
Central Bank says no action required on Anglo tapes revelations
Ryanair flew 9m passengers and Aer Lingus carried 1.1m in August
UK Competition Commission says Ryanair must cut Aer Lingus stake to 5%
CRH reports H1 2013 revenue dip and loss
Vodafone refunded UK after discovery of Irish tax haven deal
RBS reports half year profit; Ulster Bank posts reduced loss
Bank of Ireland cuts pretax losses in HI 2013 to €504m
Irish State-owned Allied Irish Banks reports losses of €758m in H1 2013
Service Announcement
Irish managed pension funds declined in June
VHI reports 2012 surplus of €54.3m; Health insurance made loss
Ex- Elan director says management / board "not competent to run a business"
Aer Lingus to put €140m in employees pensions fund; Ryanair apoplectic
Wednesday Newspaper Review - Irish Business News and International Stories - - May 22, 2013
Tuesday Newspaper Review - Irish Business News and International Stories - - May 21, 2013
Ryanair, Europe’s biggest low cost carrier, announced Monday record annual profits of €569m - - up 13%