The current level of spending cuts are contingent on 2.75% annual growth!?

Yag reuoY

http://www.rte.ie/news/2010/1026/economy.html

"[Lenihan] told journalists that the plan assumes an average growth rate over the four year period of 2.75%."

Is it not ridiculously foolish to rely on unrealistic growth projections when calculating spending cuts?

All the government's figures have been erroneous thus far, so I would prepare for far higher cuts when their assumptions are once again exposed as fantasy.

Yag eruoY

ardmacha

While it is difficult to know what is going to happen, the world economy is going to improve at some stage. When it does, Ireland is well connected to the world economy and we will grow too. There is now enormous spare capacity in Ireland, if there is any increase in world demand then we can grow fairly quickly.

Yag reuoY

ardmacha wrote: »

While it is difficult to know what is going to happen, the world economy is going to improve at some stage. When it does, Ireland is well connected to the world economy and we will grow too. There is now enormous spare capacity in Ireland, if there is any increase in world demand then we can grow fairly quickly.

But can you see an 11% swing in four years?

Personally, while this is technically possible, I'd be surprised if it actually happened.

I reckon deeper cuts will have to happen.

CoalBucket

World economy recovery or not, all of lenihans "predictions" have been at best 50% incorrect.

I'm very worried by any of the estimates coming out of the department of finance.

Nijmegen

I'd also bother to take a look at that macro economic climate. The UK is hardly growing, the US is not coming out at any great speed.

The major economies want to grow through export.

But it's a fact of mathmatics that everybody can't export to everybody else and generate growth.

In the past you had a country go into recession, then other countries would buy them out of it because their costs went down as well as their currency and their exports were cheap.

Nowadays the US is trying to compete with China for exports, and the Chinese aren't slowing down their economy - they're riding a massive tiger of growth that needs to keep growing or else their population will get nasty.

So, where is that major recovery?

gurramok

Thats based on GDP growth as well. As GNP is smaller due to MNC's based here and we rely alot on consumer spending to fuel the domestic economy, the picture is actually worse.

ardmacha

Nowadays the US is trying to compete with China for exports, and the Chinese aren't slowing down their economy

This assumes that the US is competing with China in the same products. In our case Germany is shipping lots of machinery to China so that China can make stuff to go to America. We can send some stuff to Germany, or China. Ireland is a very small part of the world economy, we can increase from 1% to 1.2% and get a significant boost without disturbing the world that much.

Nijmegen

ardmacha wrote: »

This assumes that the US is competing with China in the same products. In our case Germany is shipping lots of machinery to China so that China can make stuff to go to America. We can send some stuff to Germany, or China. Ireland is a very small part of the world economy, we can increase from 1% to 1.2% and get a significant boost without disturbing the world that much.

Every other small nation is counting on that.

Who do we export to, firstly? The UK and the US are two major players, and the US invests a lot here.

Both are showing very weak signs of growth.

Europe? Germany is keeping the engine running.

I wouldn't count on long term sustained growth. Hope for the best, but plan for the worst.

DWCommuter

The term "chasing a moving target" springs to mind.

ardmacha

I wouldn't count on long term sustained growth. Hope for the best, but plan for the worst.

Plan to achieve the best, while being aware of the downside risk. Basically get out there and do it!

dan_d

Assume makes an ass out of you and me....