European Semester Country Specific Recommendations

Scofflaw

As you may (or may not) know, Ireland is now engaged with the "European Semester" process, which involves a sort of "peer review" of the government's budgetary plans, first by the Commission, then by the Council of Member States, resulting in a set of "country specific recommendations" regarding the economy of each country. Up to now, having been in an 'adjustment programme', we've had the troika making rather more than recommendations.

The Country Specific Recommendations for Ireland and all the other EU countries are available from here: http://ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/index_en.htm

The document only runs to 5-6 pages, so it's not hard to summarise:

1. Deficit Reduction: the current govt plans to reduce the deficit are reasonably based, and endorsed by the Fiscal Advisory Council, but "the authoritiesʼ forecast for the later years of the programme are optimistic" and "the achievement of the budgetary targets is not supported by sufficiently detailed measures for 2015".

Verdict: woolly & optimistic
Recommendations: fully implement 2014 budget, implement multi-year budget planning, make the government expenditure ceiling more binding, broaden the tax base.

2. Tax Base: taxes are being used inefficiently, with too many exemptions and complexities. Property taxation has too narrow a base, labour taxation is fragmented and complex, VAT reductions and exemptions are being used as a redistributive tool "even though they are not an efficient and
well-targeted policy tool to protect vulnerable groups". There is "scope to improve the effectiveness of environmental tax instruments and removing environmentally harmful subsidies."

Verdict: inefficient and poorly targeted
Recommendations: broaden tax base, improve growth-friendliness and environmental friendliness of tax system.

3. Health care: spending is among the highest in the EU (8.7% GNI compared to 7.3% EU avg), despite a relatively young population. The situation can only disimprove without value for money gains. Multiple challenges: fragmented IT systems, poor monitoring, high pharmaceutical costs.

Verdict: needs improvement in control systems and value for money
Recommendations: more reform. Additional measures to reduce pharmaceutical spending. Reform financial management systems. Roll out individual health identifiers.

4. Unemployment: improving slightly, but "there is still a large working age population with low skills", long-term unemployment increasing as a proportion of unemployment despite falling in absolute terms, young NEETs falling but still high.

Verdict: improving, but upskilling required
Recommendations: reform of further education and training system, employment support schemes and apprenticeships. More workplace training, more relevance, better entry to the training system.

5. Poverty: risk is high, particularly for children in one-parent families. "Low work intensity" households very high proportion at 24.2% in 2011, compared to 14.3% in 2007 - both higher than EU avg. Childcare costs are a problem, as are unemployment traps created by the structure of unemployment benefits.

Verdict: welfare benefits and childcare costs probably contributing to high poverty risk
Recommendations: Tackle low work intensity of households and address the poverty risk of children through tapered withdrawal of benefits and supplementary payments upon return to employment. Facilitate female labour market participation by improving access to more affordable and full-time childcare, particularly for low income families.

6. SME Credit: lending to SMEs remains weak, partly due to low demand by over-leveraged SMEs (mostly negative property equity). Banks need to make more progress on resolving non-performing SME loans. Impact of the Credit Review Office positive but slight. Credit channels are limited (mostly bank lending) and not adequately repaired, which could hamper recovery.
Verdict: banks not sorted, SMEs still in debt, situation won't resolve itself
Recommendations: greater availability of bank and non-bank finance. Debt restructuring. Better monitoring. Promotion of non-bank schemes.

7. Credit & Banks: still a lot of non-performing loans, private sector indebtedness still among the highest in the EU. Debt from the great binge still not sufficiently reduced. Tracker mortgages remain a problem for banks.
Verdict: a good way to go yet
Recommendations: tighter monitoring, more ambitious targets for loan restructuring. More transparency. Establish a central credit registry.

8. Legal fees: cost of legal services remains high, and remains a structurally high cost for SMEs. Legal Services Regulation Bill remains to be enacted. There are "significant gaps in Ireland's ability to collect data on the quality and efficiency of the justice system".
Verdict: no real action taken?
Recommendations: enact the bill, ffs. Monitor impact.

Obviously, that doesn't cover everything, and other people may disagree over which points are most salient. Overall, though - is this monitoring and these recommendations of value to the Irish public, or not?

cordially,
Scofflaw

GCU Flexible Demeanour

Scofflaw wrote: »

Obviously, that doesn't cover everything, and other people may disagree over which points are most salient. Overall, though - is this monitoring and these recommendations of value to the Irish public, or not?

It's hard to say. I'd guess that, beyond the commentary on the overall level of spend, probably not. I'd expect that the Commission's assessments would be one information source read by international stakeholders. So I'd expect the Commission's comments about the optimism of Government forecasts would have an impact there. I don't see many giving a toss over the reform of legal fees, despite this being a substantial issue.

But I don't think the process engages the Irish public at all. And "European Semester" is a perfect example of Eurospeak. It screams "you should know what this process is, and you're a bad person for not immediately grasping how a Country Specific Recommendation fits into the broad scheme of things." It has all the boring, technical, life-draining features that exclude the public from European decisions. Here, that was your future flashing by, preceded by a dozen "Whereas" clauses.

And, at the end of it all, it doesn't make much sense. On the one hand, they want us to contain public spending. On the other, they want us to throw money at childcare for low income earners, which simply won't be self-financing. But it's just the kind of woolly, gender-mainstreamed, COnventional Wisdom of the DUmiNant Group policy statement that the EuroBlandWagon excels at.

I think the only thing that might make the European Semester relevant is if the spirit of Hunter S Thompson possesses the body of Jean Claude Juncker, should he be appointed President of the Commission.

Godge

GCU Flexible Demeanour wrote: »

And, at the end of it all, it doesn't make much sense. On the one hand, they want us to contain public spending. On the other, they want us to throw money at childcare for low income earners, which simply won't be self-financing. But it's just the kind of woolly, gender-mainstreamed, COnventional Wisdom of the DUmiNant Group policy statement that the EuroBlandWagon excels at.

It actually does make sense. We waste a lot of money on things like child benefit - still the highest in Europe, when that money could be spent on things like childcare for low income earners or medical cards for under-sixes.

Scofflaw

Godge wrote: »

It actually does make sense. We waste a lot of money on things like child benefit - still the highest in Europe, when that money could be spent on things like childcare for low income earners or medical cards for under-sixes.

Also, "contain public spending....while spending money on x" is not inherently contradictory, particularly given the (unpopular) recommendation of broadening the tax base.

cordially,
Scofflaw

GCU Flexible Demeanour

Godge wrote: »

It actually does make sense. We waste a lot of money on things like child benefit - still the highest in Europe, when that money could be spent on things like childcare for low income earners or medical cards for under-sixes.

But, sure, the reason our child benefit is the highest in Europe is precisely to avoid the expense of funding childcare. And I'm not at all sure where the political fixation with medical cards is coming from, all of sudden.

Scofflaw wrote: »

Also, "contain public spending....while spending money on x" is not inherently contradictory, particularly given the (unpopular) recommendation of broadening the tax base.

It isn't inherently contradictory in a pedantic, theoretical sense. But it is inconsistent as "advice" from the Commission.

Idbatterim

actually does make sense. We waste a lot of money on things like child benefit - still the highest in Europe, when that money could be spent on things like childcare for low income earners or medical cards for under-sixes.

could you elaborate on how its a waste? As in not having it means tester or what?

Geuze

GCU Flexible Demeanour wrote: »

But, sure, the reason our child benefit is the highest in Europe is precisely to avoid the expense of funding childcare.

Our CB is not the highest.

CB has been cut three times, from 160 to 130 pm.

It is higher in Germany, for example, at 184-215 pm.

See here:

http://www.howtogermany.com/pages/kindergeld.html

Official website:

http://www.bamf.de/EN/Willkommen/KinderFamilie/Kindergeld/kindergeld-node.html

GCU Flexible Demeanour

Geuze wrote: »

Our CB is not the highest.

Grand. Can I point your correction in the right direction, because I'm only responding to this post.

Godge wrote: »

It actually does make sense. We waste a lot of money on things like child benefit - still the highest in Europe, when that money could be spent on things like childcare for low income earners or medical cards for under-sixes.

The reason we had high child benefit (apparently, no longer the highest in Europe) was precisely to avoid the expense of providing child care.

Scofflaw

GCU Flexible Demeanour wrote: »

But, sure, the reason our child benefit is the highest in Europe is precisely to avoid the expense of funding childcare. And I'm not at all sure where the political fixation with medical cards is coming from, all of sudden. It isn't inherently contradictory in a pedantic, theoretical sense. But it is inconsistent as "advice" from the Commission.

It doesn't really seem worth arguing the point that it's possible to have more effective budgeting, and indeed a lower deficit, while spending more on certain things. Even our governments manage it - for someone to suggest it as practical advice doesn't strike me as bizarre, although it apparently does you. Clearly we differ in some fundamental way.

cordially,
Scofflaw

Godge

Geuze wrote: »

Our CB is not the highest.

CB has been cut three times, from 160 to 130 pm.

It is higher in Germany, for example, at 184-215 pm.

See here:

http://www.howtogermany.com/pages/kindergeld.html

Official website:

http://www.bamf.de/EN/Willkommen/KinderFamilie/Kindergeld/kindergeld-node.html

Ok, so the Germans have beaten us now. I stand corrected. However, is that payment taxed? If so, we are back in first place. Interesting that you have to be paying tax in Germany to get the payment.

Idbatterim wrote: »

could you elaborate on how its a waste? As in not having it means tester or what?

Some child benefit is sent to Poland, some child benefit is saved for holidays and some is drank or smoked. A very inefficient use of funds supposedly for the benefit of children.

Much better if the money was spent on childcare for under-5s for working parents, school books, medical cards for children and school meals and uniforms. The money would be going for the direct benefit of children.

Geuze

http://www.coe.int/t/dg3/familypolicy/Source/2_1_i%20System%20of%20family%20allowances.pdf

Details on all European child allowances, see above.

Data a bit out of date, seems to be 2008.

Geuze

Godge wrote: »

Much better if the money was spent on childcare for under-5s for working parents, school books, medical cards for children and school meals and uniforms. The money would be going for the direct benefit of children.

Interesting point.

Traditionally, we used to spend much more on cash, much less on services.

However, the ECCS of 1000pa cash has been replaced by the ECCE scheme, which is one step towards what you suggest.

Farmer Pudsey

CB is a bug bear of mine. Most consider it excessively high. In reality it is not at longer. Most European country's have either a good creche system or tax relief for working parents. History tell us that any system where money will be spend on school books, school meals, school uniforms and medical cards that a load of money will be swallowed up on administration and provision costs or in the case of creche fees by providers of services.

Look at the present medical card debacle for U6's. Failure to administrate the older medical cards scheme where there is no paperwork to back up organial discressionary cards. If you look at it ok to give a discressionary medical card but those that support the vulnerable throw clothes of them selves as medical cards are not means tested. We all know the history of MT where limits are so low that one is better of unemployed.

Nobody mentioned that again legal fees are excessively high, or that our health budget considering we have a young population is nearly 20% higher than the EU average on a Gross National Income basis. WE have a huge issue with professional costs and they are well above the EU average and were not tackled during the downturn.

It mentions tax exemption these are dual based at the top and bottom of tax system for the wealthy who can afford the best accounting advice and at the bottom in the form of exemption on water charges, waivers for bin collection, supernumery welfare spending, rental and social housing support.

It also mention low work intensity ( a new name for long term unemployed, single parent allowances and disability allowances). It speak's about tapering of allowances. Again history tells us that such schemes tend not to work as after they run out applicant slips back into system after benefits are withdrawn.

It also speaks about credit banks and debt restructuring. I am not sure if this is a runner the way posters threw the clothes off themselves any time write down of mortgages or personal debt is mentioned

Climber

Scofflaw wrote: »

Overall, though - is this monitoring and these recommendations of value to the Irish public, or not?

cordially,
Scofflaw

Yes I beleive that the monitoring of the Irish economy by people other than
a big ignorant f%&ker from Offaly is of value to the Irish people. In fact, when one considers that our budgeting process largely consists of political expediency rather than "best practice" (I dislike that expression but I think it makes sense to use it here) it is essential that experts, not attached to the Irish establishement, get to be involved.

It's a pity that the ordinary man mostly sees this monitoring as interferece in our Sovereignty, whilst the Eurocrats in Brussels seem to be unable to communicate the advantages of such a process to the ordinary man.

cjc0101

the BIFO, remark is a little insulting to Offaly ppl, besides a few Jackeens got us into the mess in the first place! now back to the elephant in the room, not I'm not talking about the rather rotund, Our Lady of Austerity (Angie), I'm referring to the sane Commission who along with the much vaunted ECB went our of their way to make things more difficult, with their Troikanomics, we were in trouble in 2008/2009 and the Eurotwats stabbed us in the back. no one asks, why was such a broad ranging 'bank guarantee' given in the first place? hmm might have something to do with 'Contagion', a nice way of saying French/German Banks/Pensions funds etc, pumped money in Irish banks/financial institutions, leading to them throwing money away in reckless lending, thus causing the very crash, in the first place. we Irish took all these Eurotwats, threw at us on the chin and they still aren't happy because they think a population suffering austerity will be more compliant to their United States of Europe building, which given recent events is just German rule using Brussels as a remote control.
so why should we trust the Unelected Untouchable cabal that's the commission and EU institutions. they couldn't run a pi** up in a brewery, considering the mess they made of Euroland.
ps, Climber BIFFO, remark I made wasn't meant as an attack, in my opinion a bunch of unaccountable bunch of Eurotwats can not be better than the shower up in the Dail, with their whataboutery, and the crowd before us did it rubbish, he said, she said, the usual punch a Judy act we see on political debates, where they talk over each other. we all know that everything is done under the table deals, especially in the EU, with closed Council of States meetings (in camera) sessions! all these economic progress reports are just the usual Political Hangring dress up as Pseudo Economic Reports. the ECB/Commission/Heads of State need to admit their incompetence when putting the cart before the horse, in setting up the Euro, without some sort of financial union, it's time to bide our time and hault the USE (United States of Europe) project

cjc0101

the BIFO, remark is a little insulting to Offaly ppl, besides a few Jackeens got us into the mess in the first place! now back to the elephant in the room, not I'm not talking about the rather rotund, Our Lady of Austerity (Angie), I'm referring to the sane Commission who along with the much vaunted ECB went our of their way to make things more difficult, with their Troikanomics, we were in trouble in 2008/2009 and the Eurotwats stabbed us in the back. no one asks, why was such a broad ranging 'bank guarantee' given in the first place? hmm might have something to do with 'Contagion', a nice way of saying French/German Banks/Pensions funds etc, pumped money in Irish banks/financial institutions, leading to them throwing money away in reckless lending, thus causing the very crash, in the first place. we Irish took all these Eurotwats, threw at us on the chin and they still aren't happy because they think a population suffering austerity will be more compliant to their United States of Europe building, which given recent events is just German rule using Brussels as a remote control.
so why should we trust the Unelected Untouchable cabal that's the commission and EU institutions. they couldn't run a pi** up in a brewery, considering the mess they made of Euroland.

Idbatterim

in relation to the child benefit, there is a nail on the head comment under the independent article, basically along on those that pay for everything are the strongest objectors, while the usual suspects want everything handed to them on a place are in support of it, it seems to have disappeared. I echo the sentiments of all the comments on it though, no point in elaborating any further...

http://www.independent.ie/irish-news/politics/cut-child-benefit-for-rich-government-told-30339020.html#comments

'Those most hawkish are Fine Gael supporters, residents of Dublin and those from the higher socio-economic groupings (ABs).'

found it!

Isn't it ironic that the group that would have to foot the bill are advocating prudence whilst it's the 'Spendthrift Socialists' (who love speding other people's money), who want to continue spending monopoly money to prop up our Public Sector and keep their electorial base happy.
- See more at: http://www.independent.ie/irish-news/politics/the-electorate-has-spoken-and-most-feel-a-2bn-budget-adjustment-is-an-austerity-step-too-far-30339039.html#sthash.BuUPGVk8.dpuf

Scofflaw

cjc0101 wrote: »

the BIFO, remark is a little insulting to Offaly ppl, besides a few Jackeens got us into the mess in the first place! now back to the elephant in the room, not I'm not talking about the rather rotund, Our Lady of Austerity (Angie), I'm referring to the sane Commission who along with the much vaunted ECB went our of their way to make things more difficult, with their Troikanomics, we were in trouble in 2008/2009 and the Eurotwats stabbed us in the back. no one asks, why was such a broad ranging 'bank guarantee' given in the first place? hmm might have something to do with 'Contagion', a nice way of saying French/German Banks/Pensions funds etc, pumped money in Irish banks/financial institutions, leading to them throwing money away in reckless lending, thus causing the very crash, in the first place. we Irish took all these Eurotwats, threw at us on the chin and they still aren't happy because they think a population suffering austerity will be more compliant to their United States of Europe building, which given recent events is just German rule using Brussels as a remote control.
so why should we trust the Unelected Untouchable cabal that's the commission and EU institutions. they couldn't run a pi** up in a brewery, considering the mess they made of Euroland.

Eh, no. The blanket guarantee was a purely Irish work, which Lenihan acknowledged was an act of "economic nationalism", and which was very poorly regarded in the rest of Europe.

Far from stopping contagion, or even attempting to do so, the blanket guarantee had the effect of destabilising other European banks, particularly in the UK, by sucking deposits out of them at a critical time.

cordially,
Scofflaw

Climber

cjc0101 wrote: »

the BIFO, remark is a little insulting to Offaly ppl, besides a few Jackeens got us into the mess in the first place! now back to the elephant in the room, not I'm not talking about the rather rotund, Our Lady of Austerity (Angie), I'm referring to the sane Commission who along with the much vaunted ECB went our of their way to make things more difficult, with their Troikanomics, we were in trouble in 2008/2009 and the Eurotwats stabbed us in the back. no one asks, why was such a broad ranging 'bank guarantee' given in the first place? hmm might have something to do with 'Contagion', a nice way of saying French/German Banks/Pensions funds etc, pumped money in Irish banks/financial institutions, leading to them throwing money away in reckless lending, thus causing the very crash, in the first place. we Irish took all these Eurotwats, threw at us on the chin and they still aren't happy because they think a population suffering austerity will be more compliant to their United States of Europe building, which given recent events is just German rule using Brussels as a remote control.
so why should we trust the Unelected Untouchable cabal that's the commission and EU institutions. they couldn't run a pi** up in a brewery, considering the mess they made of Euroland.

The great people of Offaly were more concerned about having their man in the Dail, rather than concerned with having the most suitably skilled person in the Dail. Yet another example of the tribalist culture at work in Ireland. The BIFO remark is well deserved IMHO.

You more or less say that you don't want to see a Federal Europe, therefore I presume that you want Ireland to "go it's own way". Havn't we tried that already, with patethis results?

Idbatterim

a hypothetical, exact same situation unfolds in a few years, there is an anglo etc, what would happen this time round, because there is simply no way with hindsight and after this many austerity budgets, this would be tolerated. Non systemic banks not guaranteed (is that legal) or is it all or none? Would they even contemplate letting a systemic bank like AIB go down with hindsight?

Scofflaw

Idbatterim wrote: »

a hypothetical, exact same situation unfolds in a few years, there is an anglo etc, what would happen this time round, because there is simply no way with hindsight and after this many austerity budgets, this would be tolerated. Non systemic banks not guaranteed (is that legal) or is it all or none? Would they even contemplate letting a systemic bank like AIB go down with hindsight?

As far as I can see, there has been no change whatsoever in the mindset of the Irish establishment on the question of saving banks. It's not a legal issue as such - there is no legal requirement to save banks, and a number of rules (particularly EU ones) that one can fall foul of when saving them.

However...the choice would not in future be up to the Irish government. A bank like Anglo would now fall under the EU Single Supervisory Mechanism and Single Resolution Mechanism, which means that the decision as to its viability would be made by the ECB, and the Single Resolution Board would be responsible for winding it down. Costs would be borne more heavily by the bondholders, and then by the Single Resolution Fund.

http://ec.europa.eu/internal_market/finances/banking-union/index_en.htm

cordially,
Scofflaw

sock puppet

Scofflaw wrote: »

As far as I can see, there has been no change whatsoever in the mindset of the Irish establishment on the question of saving banks. It's not a legal issue as such - there is no legal requirement to save banks, and a number of rules (particularly EU ones) that one can fall foul of when saving them.

However...the choice would not in future be up to the Irish government. A bank like Anglo would now fall under the EU Single Supervisory Mechanism and Single Resolution Mechanism, which means that the decision as to its viability would be made by the ECB, and the Single Resolution Board would be responsible for winding it down. Costs would be borne more heavily by the bondholders, and then by the Single Resolution Fund.

http://ec.europa.eu/internal_market/finances/banking-union/index_en.htm

cordially,
Scofflaw

Yes that €50 billion SRF will really provide an effective firewall against bank losses.



...if a crisis happens in one small country and doesn't spread anywhere else. The extent to which the taxpayer is exposed future bailouts will be determined by the success of increased capital requirements, forcing creditors to take haircuts and CoCo bonds. The SRF would only be useful in a localised crisis.

Even if those measures are successful you're still left with the fallout and deleveraging that results from a financial crisis.

Scofflaw

sock puppet wrote: »

Yes that €50 billion SRF will really provide an effective firewall against bank losses.



...if a crisis happens in one small country and doesn't spread anywhere else. The extent to which the taxpayer is exposed future bailouts will be determined by the success of increased capital requirements, forcing creditors to take haircuts and CoCo bonds. The SRF would only be useful in a localised crisis.

Even if those measures are successful you're still left with the fallout and deleveraging that results from a financial crisis.

Sure, the SRF should be bigger. The costs all round the EU for the banking crisis were a bit over half a trillion - 10 times the size of the SRF. On the other hand, there was little bondholder or depositor losses this time.

cordially,
Scofflaw

Rightwing

Climber wrote: »

Yes I beleive that the monitoring of the Irish economy by people other than
a big ignorant f%&ker from Offaly is of value to the Irish people. In fact, when one considers that our budgeting process largely consists of political expediency rather than "best practice" (I dislike that expression but I think it makes sense to use it here) it is essential that experts, not attached to the Irish establishement, get to be involved.

It's a pity that the ordinary man mostly sees this monitoring as interferece in our Sovereignty, whilst the Eurocrats in Brussels seem to be unable to communicate the advantages of such a process to the ordinary man.

I'd be inclined to agree with you if it was experts that were reviewing it. But when it's imbeciles it doesn't really matter who or what country they are from.
The point being, experts are required.

The latest EU stunt, penalising banks for holding cash by introducing negative rates. And introducing strict 'stress tests' at the same time.
Keep the good work Draghi et al.