Deficit Rises to 20.7 billion Euro.

RichardAnd

I think this merits a thread on its own. The article below says that the deficit has risen from 13.4bn last year to 20.7 this year, citing the bank recapitalisation as the reason.

I know we have a fairly substantial deficit but the figure of 20 billion really took me back. With 6 billion being cut in the last budget, I'm at a loss as to how the deficit could have jump so because really, were banks not capitalised last year also?

Perhaps I'm missing something in this figure, I don't know...


http://www.rte.ie/news/2011/1004/exchequer.html

BornToKill

You're correct that the banks were given capital last year. To the end of 2010 they had been given or promised €46.3bn in capital. The second Prudential Capital Assessment Review (PCAR 2) conducted by the Central Bank, with the assistance of BlackRock consultants and others, and concluded at the end of March 2011 determined that the banks would need a further €24bn on top of what they had already been given. Of this €24bn, €3bn of it was to be in the form of contingent capital - 'to be sure, to be sure' money. The €24bn was to be given to the banks by the end of July to meet the deadline agreed with the ECB/EU/IMF Troika.

As it happened, nearly €5bn was taken off the bill by liability management exercises either directly under the powers or indirectly under the threat of the powers contained in the Credit Institutions (Stabilisation) Act 2010; or in other words by 'burning' the subordinated bondholders. Just the same, nearly €19bn transferred from the Exchequer and the NTMA to the banks in the last week of July 2011.

Bear in mind too that the €46.3bn mentioned as promised to the banks before the end of 2010 hasn't necessarily been given to them yet. Much of the money committed to Anglo and INBS is in the form of promissory notes and is no more than a promise to come up with the money in future years. You may find the answer to this PQ to be of assistance.

Vizzy

Saw this on the 9 O'clock news and I think they said(in broad terms) that the deficit was now 20.7 billion,of this 10bn ish was due to bank re-capitalisation.This resulted in a reduction of about 3.5bn on this time last year, if you discount the re-capitalisation.
Good news I suppose in one way, but bottom line is that we now owe substantially more now than we did last year.
Can only mean that we had better gear ourselves up for a serious kicking in the budget in December.

lmimmfn

Vizzy wrote: »

Saw this on the 9 O'clock news and I think they said(in broad terms) that the deficit was now 20.7 billion,of this 10bn ish was due to bank re-capitalisation.This resulted in a reduction of about 3.5bn on this time last year, if you discount the re-capitalisation.
Good news I suppose in one way, but bottom line is that we now owe substantially more now than we did last year.
Can only mean that we had better gear ourselves up for a serious kicking in the budget in December.

so we had tax increases and cuts that equaled 6 Billion but we spent 2.5 Billion more, great, lets tax our way to increased deficits.

easychair

€20 Billion borrowed this year is, at 5% interest, another €1 Billion the Irish taxpayers have to find to pay in extra interest next year.

And every year into the future until the €20 billion is paid back.

ei.sdraob

But but but, what happened to turning a corner :rolleyes:

inforfun

ei.sdraob wrote: »

But but but, what happened to turning a corner :rolleyes:

That has happened 4 times in the same direction now, so guess where you are...

Maura74

What do you expect when former Taoiseachs like Bertie is able to claim 365,000 by way of expenses for being useless when running the country...... how may more useless ex Taoisachs are claiming expenses like this...:mad::mad::mad:

ei.sdraob

Maura74 wrote: »

What do you expect when former Taoiseachs like Bertie is able to claim 365,000 by way of expenses for being useless when running the country...... how may more useless ex Taoisachs are claiming expenses like this...:mad::mad::mad:

Dont forget a certain socialist called D Higgins telling us on tv of his 120+K a year pensions, I suppose its easy to preach "redistribution of wealth" when you are creaming it yourself right of the top

Maura74

ei.sdraob wrote: »

Dont forget a certain socialist called D Higgins telling us on tv of his 120+K a year pensions, I suppose its easy to preach "redistribution of wealth" when you are creaming it yourself right of the top

When pensions are this large than the average person then it should be taxed to bring it down to the average pensions that people are getting during this crisis...see how they will react towards this...:mad::mad:

WalterMitty

ei.sdraob wrote: »

Dont forget a certain socialist called D Higgins telling us on tv of his 120+K a year pensions, I suppose its easy to preach "redistribution of wealth" when you are creaming it yourself right of the top

Labour have been fake socialists for a long time. They look after themselves and their trade union backers as much as FF looked after themsleves and their backers did.

Atilathehun

WalterMitty wrote: »

Labour have been fake socialists for a long time. They look after themselves and their trade union backers as much as FF looked after themsleves and their backers did.

Good to see that our great second in command leader, is bringing back the system, which was so central to our economic boom. Anything which can be done, to replicate the brilliant economic management philosphies of Ahearne, and McGreedy, and our patriotic, socialist bearded leaders of the masses, can only be good for our future prospects.

http://www.irishtimes.com/newspaper/breaking/2011/1005/breaking13.html

Government to host partnership talks


The Government is to host a new process of dialogue with trade unions and employers, Tánaiste Eamon Gilmore announced today.
Mr Gilmore said the Government will invite the social partner organisations to bilateral meetings, starting next month.

However, he said it did not represent a return to ?old-style social partnership?.

Speaking before addressing the Siptu biennial delegate conference in Ennis, Co Clare, Mr Gilmore said the Government?s intention was that meetings with unions and employers would take place on a periodic basis and focus on matters of current concern.

In his speech, Mr Gilmore again ruled out blanket debt forgiveness for people in mortgage arrears.
Mr Gilmore reiterated that the only solution to the problem is one that is based on a case-by-case approach in which the circumstances of each individual family will be taken into account.
The Minister emphasised that those who can pay their mortgage must continue to do so but he will accept that there is need for a more uniform approach for people who are negotiating with the banks about mortgage arrears.
As well as looking at new options for people in difficulties, the Government is looking at ways to provide better support structures to guide people and inform them about their options.
Mr Gilmore said that when the recession first hit and people started falling behind in their mortgage payments, the only solution available was forbearance. People in trouble began to make arrangements with the banks to pay what they could, until times got better.
He pointed to the fact that the State has also made a contribution through mortgage interest supplement and that he has been a strong supporter of that approach, because of his belief that the greatest fear people have is not losing their job but losing their home.
"Some of those people will sort themselves out, by getting another job. But some of them won't, and we can't keep people in limbo for ever. What needs to happen now, is for people to start working out more permanent solutions, so that they can get on with their lives. To find ways to make that happen, the Government set up the Keane group, which will report shortly," according to the Tanaiste.
"There will be no blanket debt forgiveness. The only solution that will work is one based on a case-by-case approach, looking at the circumstances of each individual family. And those who can pay their mortgage must do so," he said.
"But we also need a more level playing field for people who are negotiating with the banks about mortgage arrears. So, as well as looking at new options for people in difficulties, we are looking at ways to provide better support structures to guide people and inform them about their options

easychair

WalterMitty wrote: »

Labour have been fake socialists for a long time. They look after themselves and their trade union backers as much as FF looked after themsleves and their backers did.

Judging by the amounts of money FF hosed at Ireland, I'd say that FF are also fake capitalists. But it's a bit late for name calling!

ei.sdraob

easychair wrote: »

Judging by the amounts of money FF hosed at Ireland, I'd say that FF are also fake capitalists. But it's a bit late for name calling!

Judging by the huge increases (above rampant inflation) in welfare and PS spend during their years, FF made good use of "socialism" to buy themselves votes and run the country into the ground.

But at least the electorate spanked them across the rear during the last election.

easychair

ei.sdraob wrote: »

Judging by the huge increases (above rampant inflation) in welfare and PS spend during their years, FF made good use of "socialism" to buy themselves votes and run the country into the ground.

But at least the electorate spanked them across the rear during the last election.

It's a shame the Irish electorate didn't spank them before they ended up owing billions piled on billions piled on yet more billions. I'm still at a loss to know why the Irish electorate still votes for Lowry, and before that Beverly Cooper Flynn. What is it about the Irish electorate that they continue to vote for the wrong people?

wolfpawnat

This is what happens when people are left on the dole queues, and no finances put into job creation! And those who are in the high paid areas of the Public Sector and TDs are paid insane amounts of money!!!!

Riskymove

RichardAnd wrote: »

I think this merits a thread on its own. The article below says that the deficit has risen from 13.4bn last year to 20.7 this year, citing the bank recapitalisation as the reason.

this has been raised a number of times and usually the thread just ends up being the usual circular arguments about public expenditure.

as set out in the earlier threads, the recapitilisation of banks was not included in public expenditure figures by the last Government until they were forced to do so by the EU

The lazy reporting by the media on this portrays this as 'the deficit rising' but that is not accurate..the 13.4 from last year and the 20.7 for this are not like-for-like figures

the 13.4 from last year compares to around 11 this year

or if you prefer the 13.4 from last year should really be seen as around 23

easychair

Riskymove wrote: »

The lazy reporting by the media on this portrays this as 'the deficit rising' but that is not accurate..the 13.4 from last year and the 20.7 for this are not like-for-like figures

I wonder how much consolation it might be for the Irish taxpayer to realise the figures are not like for like. They will be the ones paying the interest on the borrowings.

Riskymove

easychair wrote: »

I wonder how much consolation it might be for the Irish taxpayer to realise the figures are not like for like. They will be the ones paying the interest on the borrowings.

the existience of a deficit that needs to be handled is a different issue - I am simply answering the OPs question

the deficit has not risen 7 bn since last year, it is just being reported differently

if there is no further capitalisation of banks then next year the reported deficit will fall from 20.7 bn to about 10 or 11


EDIT

I think they would take some consolation to be reassured that spending did not actually increase by 7bn this year

Zubeneschamali

easychair wrote: »

I wonder how much consolation it might be for the Irish taxpayer to realise the figures are not like for like.

I think it is a consolation. The announcements of this "increased" deficit all came with the message: we are on track, we are hitting the targets imposed by the troika.

So, not bad news.

djpbarry

wolfpawnat wrote: »

This is what happens when people are left on the dole queues, and no finances put into job creation!

What does "putting finances into job creation" entail?

easychair

Zubeneschamali wrote: »

I think it is a consolation. The announcements of this "increased" deficit all came with the message: we are on track, we are hitting the targets imposed by the troika.

So, not bad news.

On track for what, exactly? We are on track to be able to borrow billions more, not for any investment, but just to pay the public sector salaries, and social welfare payments.

I am not saying thats not necessary, but when you consider this year Ireland will borrow +-€20 billion, which means next year Ireland will have all the same public sector salaries, probably increased welfare payments, and to that we have to add the interest payments on the increased borrowing of +- €20 billion.

At 5% (its more likely to be 7%) that's an extra €1 billion next year the Irish government has to pay in interest, in addition to all the other bills it has, which presumably also has to be borrowed. So Ireland has to borrow money to pay the interest on previously borrowed money, and so on and on it goes.

Nothing is resolved, nothing is fixed, the position of Ireland worsens all the time as the country slides deeper and deeper into debt, and the can is again kicked down what appears to be a very long road.

Riskymove

easychair wrote: »

Nothing is resolved, nothing is fixed, the position of Ireland worsens all the time as the country slides deeper and deeper into debt, and the can is again kicked down what appears to be a very long road.

the deficit continues to be reduced, there will be less paid next year on PS Bill, general government expenditure and , hopefully, SW

there are no current plans for any more bank capitalisation

easychair

Riskymove wrote: »

the deficit continues to be reduced, there will be less paid next year on PS Bill, general government expenditure and , hopefully, SW

there are no current plans for any more bank capitalisation

That the deficit might continue to be "reduced" is not in dispute. What is also not in dispute is that Ireland needs to continue to borrow billions every year to pay its bills.

It's a truly horrible situation, and next year Ireland will have to borrow billions of euro just to service the interest on the previous tens of billions of euro which it has borrowed.

The problem is that Ireland has borrowed billions and billions more than it can afford, or service. If Ireland has borrowed at an average of, say, 5% and the national debt is +-€150 billion by the end of 2014, the interest payments alone, before a cent of teh debt is paid off, would amount to €7.5 billion per annum. That's every year into the future.

Zubeneschamali

easychair wrote: »

The problem is that Ireland has borrowed billions and billions more than it can afford, or service.

As a percentage debt to GDP, we were in a similar hole in the 80s, and climbed out.

easychair

Zubeneschamali wrote: »

As a percentage debt to GDP, we were in a similar hole in the 80s, and climbed out.

Sure, lets hope Ireland can once again climb out of it. The world situation now seems less buoyant that it was in the 1980's, and the debt situation in Ireland is also very different, with household debt in 2011 being many times higher than it was in the 1980's, and also with corporate debt being much higher in 2011.

I am a planner, and don't think a good plan is ever to say "lets hope we can get out of this" as, very often, that's not a good plan, or at least not a plan that often works out well.

The problem I see for Ireland is that the Government's of the past have not planned well, if at all, and the result of that lack of planning is that Ireland is now in an appalling mess, with a pretty awful vista of what the future might hold.

OMD

easychair wrote: »

At 5% (its more likely to be 7%) that's an extra €1 billion next year the Irish government has to pay in interest, in addition to all the other bills it has, which presumably also has to be borrowed. So Ireland has to borrow money to pay the interest on previously borrowed money, and so on and on it goes.

Nothing is resolved, nothing is fixed, the position of Ireland worsens all the time as the country slides deeper and deeper into debt, and the can is again kicked down what appears to be a very long road.

where are you getting the 7% interest rate from?

FreudianSlippers

djpbarry wrote: »

What does "putting finances into job creation" entail?

Borrowing more and spending a massive amount on infrastructure would be smart, but it's likely not what our government would do.

WalterMitty

FreudianSlippers wrote: »

Borrowing more and spending a massive amount on infrastructure would be smart, but it's likely not what our government would do.

what infrastructural investments do we need? Sustainable ones mind, not building things for sake of it that wont have long term economic returns.

FreudianSlippers

WalterMitty wrote: »

what infrastructural investments do we need? Sustainable ones mind, not building things for sake of it that wont have long term economic returns.

Well, we need a integrated transport system in Dublin. Metro North and Dart Underground should start ASAP.
We are in desperate need of school rebuilds and refurbs.
Our communication infrastructure is shockingly bad. We can now get 100mb broadband in Dublin? wowee! :rolleyes:

Our ports need work... I could keep going.

djpbarry

easychair wrote: »

I am a planner, and don't think a good plan is ever to say "lets hope we can get out of this"...

That's probably why there is a plan, the adherence to which is being closely monitored by the EU/IMF.

FreudianSlippers wrote: »

Our communication infrastructure is shockingly bad. We can now get 100mb broadband in Dublin? wowee! :rolleyes:

In my last flat in London, the fastest broadband speed available to me, from any provider, was 4 mbps.

FreudianSlippers

djpbarry wrote: »

That's probably why there is a plan, the adherence to which is being closely monitored by the EU/IMF.
In my last flat in London, the fastest broadband speed available to me, from any provider, was 4 mbps.

Virgin does up to 100mb

djpbarry

FreudianSlippers wrote: »

Virgin does up to 100mb

Not countrywide they don't.

FreudianSlippers

djpbarry wrote: »

Not countrywide they don't.

Still, the point is that we should be improving ours to match the best, not the mediocre...

AlmightyCushion

FreudianSlippers wrote: »

djpbarry wrote: »

Not countrywide they don't.

Still, the point is that we should be improving ours to match the best, not the mediocre...

100Mb is far from mediocre.

FreudianSlippers

AlmightyCushion wrote: »

100Mb is far from mediocre.

That's not necessarily true IMO. Plus it's not available in most of the city even. 25mb is the top speed I can get and I'm in city centre.

Voltex

I read these types of threads and wonder if th folks whinging and moaning about the billions spent srvicing our debts ver think about what it would b lik if we suddenly brought in a balanced budget for 2012?

We would see s.w slashed by 50%, health slashed by 25%, education by 25%, capital budgets wiped out and whats left paying interest...if we thought the recession of 08-09 was bad...this would effectivley send us back to the 80's. We are where we are...so we need to manage our way through this as best we can inflicting the least damage we can on the economy.

Tea drinker

Voltex wrote: »

I read these types of threads and wonder if th folks whinging and moaning about the billions spent srvicing our debts ver think about what it would b lik if we suddenly brought in a balanced budget for 2012?

We would see s.w slashed by 50%, health slashed by 25%, education by 25%, capital budgets wiped out and whats left paying interest...if we thought the recession of 08-09 was bad...this would effectivley send us back to the 80's. We are where we are...so we need to manage our way through this as best we can inflicting the least damage we can on the economy.

The money needs to be moved to more productive areas, and people need to be more productive, i.e for a small bit more than the dole you can get people working. Doesn't happen without capital projects, and none of it will happen until waste in PS CS is tackled. But as it's leading from the top with what must be 10's of thousandas of people on 150K plus per annum jobs / quango we are screwed till we sort that. The money we have is being misdirected.

easychair

Tea drinker wrote: »

The money needs to be moved to more productive areas, and people need to be more productive, i.e for a small bit more than the dole you can get people working. Doesn't happen without capital projects, and none of it will happen until waste in PS CS is tackled. But as it's leading from the top with what must be 10's of thousandas of people on 150K plus per annum jobs / quango we are screwed till we sort that. The money we have is being misdirected.

I'm surprised that some folks seem to put their faith in today's politicians to plan Ireland's way out of the current problems.

We can all see that the sort of politicians in Ireland are career politicians, and there are no signs so far that the government has either the will or the ability to change around the economy.

FreudianSlippers

Tea drinker wrote: »

The money needs to be moved to more productive areas, and people need to be more productive, i.e for a small bit more than the dole you can get people working. Doesn't happen without capital projects, and none of it will happen until waste in PS CS is tackled. But as it's leading from the top with what must be 10's of thousandas of people on 150K plus per annum jobs / quango we are screwed till we sort that. The money we have is being misdirected.

The problems are being misdirected as well... a prime example is the legal services bill and all of the talk about wigs and gowns being the problem leading to high fees - it makes anyone with half a brain say "wtf?", but you can be sure some people are buying it 100%.

There is also a massive misdirect in which the government is promoting savings rather than spending coupled with the fact that most people (and most on this forum as well) don't understand that no country has EVER saved their way out of a recession - the only way is to spend on capital projects, preferably infrastructure (most bang for the buck and you actually have something to show for it).

Riskymove

Tea drinker wrote: »

But as it's leading from the top with what must be 10's of thousandas of people on 150K plus per annum jobs / quango we are screwed till we sort that. The money we have is being misdirected.

nah, way off!!

e.g. a recent reply from Brendan Howlin

The number of civil servants across the civil service currently on pay scales over €100,000, €150,000, €200,000 and €250,000 is set out in the table below.

This is less than 2% of numbers serving.

NON INDUSTRIAL CIVIL SERVANTS END JUNE 2011 Headcount
Over €100,000 585
Over €150,000 48
Over €200,000 13
Over €250,000 0
TOTAL 646

These figures do not take account of the deduction of the pension levy which was introduced in March 2009.

fliball123

Riskymove wrote: »

nah, way off!!

e.g. a recent reply from Brendan Howlin

This table also does not take into account the 3 annual increments costing 1/4 of a billion a year. This is what sickens me all areas of spend will be reduced in December and PS tripple Ps will go up ..The mind boggles

Riskymove

fliball123 wrote: »

. This is what sickens me all areas of spend will be reduced in December and PS tripple Ps will go up ..The mind boggles

dare I ask this as it probably means the end of this thread...but...

what are you on about? I know the increments issue has been discussed many times before, the PS pay bill is going down in recent years, not up

fliball123

Riskymove wrote: »

dare I ask this as it probably means the end of this thread...but...

what are you on about? I know the increments issue has been discussed many times before, the PS pay bill is going down in recent years, not up

It has gone down due to retirements - hense the pension side has gone up..So its moving A to B and also gone down due to cutting out contractors and cutting out silly practises such as a half hour for cashing none existing cheques..Thats how it has come down..But there is still 1/4 of billion extra being paid this year which was not paid last year due to annual increments still going on within the PS...Also I would leave it at that I do not want to turn it into a PS bashing thread...just wanted to bring a fuller picture to the chart that was displayed

Riskymove

fliball123 wrote: »

...just wanted to bring a fuller picture to the chart that was displayed

fine...
the chart displays the number of highest earners in the CS at the moment, increments are not likely to affect that greatly, indeed the vast bulk of any increment would be taken back in tax, prsi, USC, pension levy etc

the removal of 'bank-time' would not affect these figures either (indeed it does not save any money)

while retirements are a factor in saving money its actually the non-replacement of those staff that is the key, the overall PS pay and pension bill is reducing

fliball123

Riskymove wrote: »

fine...
the chart displays the number of highest earners in the CS at the moment, increments are not likely to affect that greatly, indeed the vast bulk of any increment would be taken back in tax, prsi, USC, pension levy etc

the removal of 'bank-time' would not affect these figures either (indeed it does not save any money)

while retirements are a factor in saving money its actually the non-replacement of those staff that is the key, the overall PS pay and pension bill is reducing

but we all pay tax prsi USC ...pension levy has not saved anything when you take this increments into play...Look as I say I dont want to turn it into a PS debate...but these increments should not be going on

meditraitor

Riskymove wrote: »

fine...
the chart displays the number of highest earners in the CS at the moment, increments are not likely to affect that greatly, indeed the vast bulk of any increment would be taken back in tax, prsi, USC, pension levy etc

the removal of 'bank-time' would not affect these figures either (indeed it does not save any money)

while retirements are a factor in saving money its actually the non-replacement of those staff that is the key, the overall PS pay and pension bill is reducing

How many are in the CS compared to the PS? less than 10% of the overall PS I believe

so if you multiply that x 10 (guess work) you have 1000's of workers being paid over €100.000 per annum by the taxpayer.

Riskymove

meditraitor wrote: »

How many are in the CS compared to the PS? less than 10% of the overall PS I believe

so if you multiply that x 10 (guess work) you have 1000's of workers being paid over €100.000 per annum by the taxpayer.

the statement was made that there were "tens of thousands" earning over 150k - I was responding to that

obviously there are some earning those figures, but it is a low %

meditraitor

Riskymove wrote: »

the statement was made that there were "tens of thousands" earning over 150k - I was responding to that

obviously there are some earning those figures, but it is a low %

apologies for misreading,

Back to the point of the thread, how do we reduce the deficit?


The 2 obvious ones are

Social welfare spend needs to be reduced

Public sector pay and numbers need to be reduced

Job creation..... this is the most obvious.
There are some frightening stats on the most recent esri Labour Market Quarterly National Household Survey
http://www.cso.ie/releasespublications/documents/labour_market/current/qnhs.pdf

easychair

meditraitor wrote: »

There are some frightening stats on the most recent esri Labour Market Quarterly National Household Survey
http://www.cso.ie/releasespublications/documents/labour_market/current/qnhs.pdf

Would you care to discuss what they are?

meditraitor

easychair wrote: »

Would you care to discuss what they are?

For starters long term unemployment

Long-term unemployment increases by 29.3% over the year to Q2 2011
In the year to Q2 2011, the number of persons classified as long-term unemployed increased by 37,200 (+29.3%), bringing
total long-term unemployment to 164,200. Short-term unemployment decreased by 27,800 (-16.9%) over the year to
136,300. See tables 7a, 7b and figure 5.
Long-term unemployment accounted for 53.9% of total unemployment in the second quarter of 2011, while the
share of persons who were long-term unemployed in the second quarter of 2010 was 43.3%. Q4 2010 was the first
occasion since the late 1990’s when long-term unemployment had accounted for more than half of totalunemployment. See tables 7a, 7b and figure 5.
The long-term unemployment rate increased from 5.9% to 7.7% over the year to the second quarter of 2011.

Were is the job creation going to come from to deal with this?