Has my logic failed me here? The €15 billion of cuts ...

Pacing Mule

I'm sure it's not as simple as this and perhaps someone can point out where I have gone wrong here

Figures being thrown about say we need €15 billion of cuts in next 4 years.

Now there is a mention of €5.5 billion to €6 billion beiung cut in the upcoming budget.

So my rather simplisitc question is this ? If we're cutting by even a conservative €5 billion this year, assuming we're not going to then spend it in the next 3 years after that, surely this means a total cut of €20 billion over 4 years ?? If we need 15 billion over 4 years then why arent we cutting a bit less than 4 billion and leaving it at that for the next 4 years ?

What have I missed ?

Snakeblood

They're frontloading this year, getting a large percentage of the cuts out of the way, to get the confidence of Europe and investors back.

If you believe the thieves and liars.

Riskymove

Pageant Messiah wrote: »

Figures being thrown about say we need €15 billion of cuts in next 4 years.

Now there is a mention of €5.5 billion to €6 billion beiung cut in the upcoming budget.


What have I missed ?

if we cut 5bn now then there is a furhter 10bn to be cut over the following 3 years after that

crazyderk

From
http://www.tv3.ie/article.php?article_id=47518&locID=1.2.&pagename=news

The Government hopes that by making the correction of €6bn now, and another €9bn over the following three years, it will be enough to calm the international markets.

Pacing Mule

Snakeblood wrote: »

They're frontloading this year, getting a large percentage of the cuts out of the way, to get the confidence of Europe and investors back.

If you believe the thieves and liars.

If they frontload it this year then they will have to increase spending next year or else meet the 15 billion one and half years early.

Unless the plan is to announce tax cuts / increased spending just before the next election.

talla10

Snakeblood wrote: »

They're frontloading this year, getting a large percentage of the cuts out of the way, to get the confidence of Europe and investors back.

If you believe the thieves and liars.

I dont believe them at all at first Anglo would cost 'only' €6 billion and that skyrocketed to almost €50 billion. If i hadn't commitments in this country i'd be gone years ago :mad:

Riskymove

Pageant Messiah wrote: »

If they frontload it this year then they will have to increase spending next year or else meet the 15 billion one and half years early.

you are definitely missing something...what I dont know

Pacing Mule

crazyderk wrote: »

From
http://www.tv3.ie/article.php?article_id=47518&locID=1.2.&pagename=news

The Government hopes that by making the correction of €6bn now, and another €9bn over the following three years, it will be enough to calm the international markets.

Riskymove wrote: »

if we cut 5bn now then there is a furhter 10bn to be cut over the following 3 years after that

Again my question remains - the 5 billion cut now can't be ignored for year 2. Year 2 still has 5 billion in cuts compared to now within it. Likewise with year 3 and 4.

A 5 billion cut is 5 billion a year multiplied by 4 years = 20 billion versus current spending.

leeroybrown

Pageant Messiah wrote: »

If they frontload it this year then they will have to increase spending next year or else meet the 15 billion one and half years early.

Unless the plan is to announce tax cuts / increased spending just before the next election.

No. They'll have to find an additional 9 billion of cuts over the following there budgets to bring our deficit under control. Unless tax income increases out of line with estimates the country will be spending €15 billion a year less than it is now in the budget in four years time.

Riskymove

Pageant Messiah wrote: »

Again my question remains - the 5 billion cut now can't be ignored for year 2. Year 2 still has 5 billion in cuts compared to now within it. Likewise with year 3 and 4.

A 5 billion cut is 5 billion a year multiplied by 4 years = 20 billion versus current spending.

its about reducing the deficit

lets say its €20bn, we wanth to reduce it by €15bn, i,e, to €5bn

now we adjust it by €5bn for 2011

the deficit is now €15bn

we need a furhter adjustment of €10 bn over the next 3 years to reach €5bn

mox54

The whole affair is a bloody shambles, you won't find any economist that will tell you the Govt knows what they're doing cause they simply don't, we simply can't cut 15 billion and continue as we are, we now depend on intel and us pharma companies for our very existence, we'll end up as a rescue mission from eu yet, no bloody harm too,

Snakeblood

Pageant Messiah wrote: »

Again my question remains - the 5 billion cut now can't be ignored for year 2. Year 2 still has 5 billion in cuts compared to now within it. Likewise with year 3 and 4.

A 5 billion cut is 5 billion a year multiplied by 4 years = 20 billion versus current spending.

No....

If I cut five billion from (let's say) 100 Billion, then the budget next year is 95 billion. The next year, I ahve to cut three billion, making the budget for the following year 92 billion. Then I cut another three billion the year after, making it 89 billion. And the year after THAT another 3 billion cut is made.

2011 100 - 5=95 billion
2012 95-3= 92 billion
2013 92 -3= 89 billion
2014 89 -3= 86 billion.

Riskymove

Pageant Messiah wrote: »

A 5 billion cut is 5 billion a year multiplied by 4 years = 20 billion versus current spending.

you seem to be looking at as the notional loss of the spending for ever more

as in if you spend 50bn this year and then only spend 45bn every year from then on that we have lost 5bn per annum for ever more into the future

Pacing Mule

Snakeblood wrote: »

No....

If I cut five billion from (let's say) 100 Billion, then the budget next year is 95 billion. The next year, I ahve to cut three billion, making the budget for the following year 92 billion. Then I cut another three billion the year after, making it 89 billion. And the year after THAT another 3 billion cut is made.

2011 100 - 5=95 billion
2012 95-3= 92 billion
2013 92 -3= 89 billion
2014 89 -3= 86 billion.

Ok I see your point there.

I was coming at it from the we need to claw back a once off 15 billion - not we need to get into a position where we are 15 billion better off on a yearly basis going forward.

Pacing Mule

Pageant Messiah wrote: »

I was coming at it from the we need to claw back a once off 15 billion - not we need to get into a position where we are 15 billion better off on a yearly basis going forward.

If it's not too lame to quote myself ....

That means we're in a lot worse shape than I thought we were. Just how badly screwed are we if we need to get 15 billion in total every year going forward :eek:

Saadyst

Pageant Messiah wrote: »

If it's not too lame to quote myself ....

That means we're in a lot worse shape than I thought we were. Just how badly screwed are we if we need to get 15 billion in total every year going forward :eek:

I don't think you understand how the deficit / expenditure cuts work at all.

Deficit is the shortfall between what is spent and what is made.

The shortfall becomes long-term debt.

The deficit needs to be reduced because that's just borrowing money, and there seems to be an inability to pay.

Frontloading refers to cutting a bigger chunk of expenditure at the start of the 4 year plan, and smaller chunks in later years.

So, the 5 billion will be cut from expenditure, meaning we're still spending 15 billion too much. Then the next year we'll cut (for the sake of example) 4 billion. We're still spending 11 billion too much. And so and so forth.

Until it gets down to 5 or so billion, which is deemed "acceptable".

But all that debt is still to be paid off at some point.

flutered

Pageant Messiah wrote: »

If it's not too lame to quote myself ....

That means we're in a lot worse shape than I thought we were. Just how badly screwed are we if we need to get 15 billion in total every year going forward :eek:

we have been well lubed and shafted, be prepared to be badly and painfully shafted again, minus the lube this time.

Sleepy

Ah, that's not fair flutered...

there was never any lube involved.

brianw

look at it this way...for example

say current spending is €50bn, and the government says we need to cut 14bn, bringing it into 36bn, over a four year period.

2011 spending is 45 (i.e. a 5bn cut)
2012 is 41 (another 4 cut)
2013 is 38 (another 3)
2014 is 36 (and a last cut of 2)

therefore in the four year period the total spend is 45 + 41 + 38 + 36 = 160bn

If no cuts were necessary, the total spend would have been 50 x 4 = 200bn

So in effect 40bn is taken from the economy over 4 years.

fat__tony

The economy is screwed for the next 10 years, it'll be the 1980's all over again.

ei.sdraob

brianw wrote: »

look at it this way...for example

say current spending is €50bn, and the government says we need to cut 14bn, bringing it into 36bn, over a four year period.

2011 spending is 45 (i.e. a 5bn cut)
2012 is 41 (another 4 cut)
2013 is 38 (another 3)
2014 is 36 (and a last cut of 2)

therefore in the four year period the total spend is 45 + 41 + 38 + 36 = 160bn

If no cuts were necessary, the total spend would have been 50 x 4 = 200bn

So in effect 40bn is taken from the economy over 4 years.

Taken out? Not borrowed as much you mean....

flutered

take into consideration that the goverment has got approval from the ecb not to make any repayments on loans for the next two years, so for the budget year 2013 these have to be repayed, on top of another harsh budget, can any one guess who will not be around to face the music.