| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
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.

Welcome

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

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Irish Economy Last Updated: Oct 11, 2011 - 8:45 AM


Ireland is a high public spending economy but remains a low tax economy - - Goodbody
By Finfacts Team
Oct 11, 2011 - 6:32 AM

Email this article
 Printer friendly page

Ireland is a high public spending economy but remains a low tax economy according to a report published by Goodbody on Monday.

Ireland is no longer a low Government expenditure economy compared with public spending as a % of GNP (gross national product) relative to the Eurozone average (% of GDP) until 2007, when both were c. 44%. The brokers say that since the onset of the economic crisis, government spending has shot up to 60% of GNP compared to 50% of GDP (gross domestic product)  for the Eurozone. This increase was largely driven by the collapse in GNP experienced by Ireland (-19% between 2007 and 2009 vs. -1% for the Eurozone).

Economists Juliet Tennent and Dermot O'Leary say that while public spending has shot up, Ireland remains a low tax economy with a total revenue to GNP ratio of 40% in 2010 versus 45% (to GDP) for the Eurozone. On this measure the State's expenditure is 10% above the Eurozone average, while its revenues are 5% below.

The economists say part of the revenue decline is cyclical, reflecting the scale of the collapse. However, construction related revenues have shown a structural decline, highlighting the undiagnosed structural deficit that the State was effectively running during the boom years.

...resulting in a primary deficit of €14bn - In 2010, Total Revenue came to €53bn and Total Expenditure (less banking costs) came to €72bn, leaving a general government deficit of €19bn. Adjusting for the €5bn interest bill, the primary government deficit was €14bn or 9% of GDP. This is forecast to fall to 6% in 2011 and needs to be converted to a surplus of 3% of GDP by 2015 to bring Government debt onto a sustainable trajectory and meet the EU/IMF target of a 3% general government deficit by 2015.

More than €6bn in expenditure cuts required - The last Government outlined a 4 year plan with a total of €10bn in adjustments required between 2012 and 2014. Within this, expenditure cuts of €6bn were targeted. The current Government is currently drawing up its own multi-year plan and is conducting comprehensive spending review (CSR) to identify areas for possible cost reductions.

With savings in the big spending departments necessary - Health and Social Protection are expected to account for 65% of total gross current spending in 2011 and it is in these departments that the largest cuts may be seen. From another perspective, the public sector pay and pensions bill is expected to total €18.6bn in 2011. Despite previous reductions it accounts for over half of the total current spending in both the Departments of Health and Education. It is in these areas that the CSR is likely to focus.

Recent positive developments not enough - The economists say a reduction in the interest bill and a return to economic growth in Q2 is positive, but there is still much hard work to do to engineer a successful fiscal consolidation. A slowing international backdrop creates risks to meeting tax revenue projections. In our view, these should not be replaced with further tax increases. With expenditure out of kilter with the Eurozone, the momentum needs to be maintained on the cost side and current adjustments of €6bn need to be implemented.

Spending beyond our means (pdf)

Related Articles


© Copyright 2011 by Finfacts.com

Top of Page

Irish Economy
Latest Headlines
Ireland's Credit-less Recovery: Household debt/ disposable income ratio at 196%
OECD endorses Ireland's Action Plan for Jobs but some key data misunderstood
Thursday Newspaper Review - Irish Business News and International Stories - - April 17, 2014
Ireland’s Stability Programme 2014 Update published; Noonan still hopes to cut income tax
Irish Economy 2014: Goodbody hails “A Jobs Friendly Recovery”; Wants austerity to stay
Irish Economy: Data confirms jobs in foreign-owned exporting firms in 2013 below 2000 level
Irish Economy 2014: Department of Finance wants tax rises; Noonan wants tax cuts
Irish Economy: Budget deficit was 7.2% in 2013
Irish Economy 2014: Merchandise exports up 1% in February
OECD BEPS Project: Ireland should embrace corporate tax reform
Irish Economy 2014: Reliable sectoral jobs data missing for first time in 60 years
Irish Economy 2014: ESRI says growth will remain strong in 2014 and 2015
Rise in Irish jobs vacancies in first quarter
Irish Economy 2014: Consumer sentiment slightly down in March
Irish Corporate Tax: Government begins publicity offensive on tax with irrelevant paper
Irish Economy 2014: Bord Gáis Energy Index rises 1% in March; Up 41% from start 2010
Irish Economy 2014: Ibec forecasts robust growth in tax-related services exports
Irish Economy 2014: Industrial production up; Services dip contrary to PMI
Irish Economy 2014: Central Bank expects GDP to grow 2% this year
Irish Economy 2014: Claim IFSC firms employ 35,700 - official data at 23,300
Irish pension managed funds returned 1.9% in Q1 2014
Alexion Pharma International Trading of US to add 200 jobs in West Dublin
Corporate Tax: OECD's Saint-Amans says "Double Irish Dutch" sandwich tax scheme will be axed
Irish Economy 2014: Services PMI accelerates in March but official data more muted
Irish Economy 2014: Q1 Exchequer Returns income tax up €4m on target despite jobs growth
Irish Economy 2014: Numbers on Live Register/ activation programs in March at 22% of workforce
Irish pension managed funds index up only 0.12% in March 2014
Ireland is high cost business location; Labour, electricity, business service costs, rising
Irish Economy 2014: Manufacturing PMI rises in March; Misses impact of drugs patent cliff
New Irish startups at average of 127 per day in Q1 2014 -- reality check?
Irish Economy 2014: Retail sales volume dipped in February
Annual money laundering in Ireland at least €3bn
Ibec begins PR campaign for income tax cuts
Corporate Tax Reform: OECD says Ireland/ India top global ICT services exporters
Corporate Tax 2014: Irish tax partner forecasts influx of foreign firms to cut tax burdens; Really?
Average Irish land price in 2013 fell to €9,400 an acre & €23,200 per hectare
Irish Economy 2014: Merchandise exports fell in January
Corporate Tax & Ireland as Doormat: Enda Kenny offers personal support service for US business
Irish adjusted GNP in 2013 estimated at 1% compared with official level of 3.4%
Irish Economy 2014: Consumer prices fell in year to February