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Could Ireland economy collapse permanently?

  • 18-07-2020 4:34pm
    #1
    Registered Users Posts: 1,263 ✭✭✭


    Hi

    All just wondering what are people's thoughts on the risks of a permanent crash?

    By permanent I mean more specifically will our economy deteriorate inthat we may be more like an eastern European country. The likes of Poland, Hungary etc dont appear to be poor like Bangladesh or the like but there is a reason so many immigrants from eastern Europe need to come to ireland and uk etc for employment.

    I'm struck that Ireland is probably the most at risk country right now in western world for a economic shock.

    I'm concluded this based on potential impact from

    1.Coronavirus global depression
    2. No deal Brexit
    3. Significant movement on the cards for measures to be taken by EU Commission to harmonise corporation tax. This may mean sales are taxed in the country where they occur and not where company is headquartered. Hence we would see huge dip in Corp tax receipts and huge loss of low Corp tax advantage that attracts the multinationals.

    At some point the impact of depression or recession will pass at some point but issues resulting from Brexit and any corp tax harmonisation could be permanent.

    I've a child on the way and looking to buy a house soon presuming my job remains intact. It's a worry to think though that so much could change in the long term.

    Is my outlook too pessimistic or realistic?


«1345

Comments

  • Registered Users Posts: 12,993 ✭✭✭✭Geuze


    Too pessimistic.

    These are all challenges, yes.

    A hard Brexit, no FTA, with WTO trading means something like the following:

    "your income is 100 now, instead of growing to 130 in ten years time, it will grow to 120"

    Bad, but not a disaster.


  • Registered Users Posts: 12,993 ✭✭✭✭Geuze


    The COVID recession will be three months long, maybe six months, (2020 Q2 and maybe Q3) then a recovery.

    Yes, it will take much longer to get back to the previous peak, yes.

    http://econbrowser.com/archives/2020/07/recessions-vs-negative-output-gaps

    The negative output gap will last much longer than the recession.


  • Registered Users Posts: 18,357 ✭✭✭✭kippy


    Geuze wrote: »
    The COVID recession will be three months long, maybe six months, (2020 Q2 and maybe Q3) then a recovery.

    Yes, it will take much longer to get back to the previous peak, yes.

    http://econbrowser.com/archives/2020/07/recessions-vs-negative-output-gaps

    The negative output gap will last much longer than the recession.

    We are nowhere near being able to say that.
    Covid is going to have a major effect on the global economy until a vaccine is found and/or some level of herd immunity is achieved.
    Ireland's biggest issue in the short term is our reliance on tourism be it international, retirees, students. That industry is decimated for the next 6 to 12 months at a minimum.

    I don't think things are as bad as the OP may be thinking but I believe they are bad and some of the effects will be worse than 2008 and effect far more people.


  • Registered Users Posts: 517 ✭✭✭yoke


    Regarding multinationals/tax , the only thing I can see that could mess it up for ireland would be if ireland voted to increase its corporate tax rate by itself, due to stupidity.

    If it was as simple as taxing sales where the buyer was headquartered, then you would lose some tax/business based on that, but you'd probably make a net gain, because a lot of the buyers would just open a new "European HQ" in an office in Dublin.

    That would actually create a new tax loophole in fact - you could have like a bank in Germany which has a European hq in dublin, but does all its business in Germany, paying tax in ireland.


  • Registered Users Posts: 1,725 ✭✭✭lalababa


    Sure , what ya gonna do. If you're not a properties or markets investor it really doesn't matter to ya. Only worry about what's inside your own job and door. Because they're the only places where you can do something.


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  • Registered Users Posts: 167 ✭✭BillyBiggs


    A lot of businesses will go to the wall, unable to pay creditors and retail landlords. That will have a knock on effect on house prices and emigration. Ireland is probably too small a country to take such a heavy hit. Our government having the horn for lockdown doesn’t help. Can you imagine if you were a pub owner anywhere in Ireland at the moment?


  • Closed Accounts Posts: 443 ✭✭Hairy Japanese BASTARDS!


    Geuze wrote: »
    Too pessimistic.

    These are all challenges, yes.

    A hard Brexit, no FTA, with WTO trading means something like the following:

    "your income is 100 now, instead of growing to 130 in ten years time, it will grow to 120"

    Bad, but not a disaster.

    You can be guaranteed teachers' income won't be curtailed though.


  • Banned (with Prison Access) Posts: 3,316 ✭✭✭nthclare


    BillyBiggs wrote: »
    A lot of businesses will go to the wall, unable to pay creditors and retail landlords. That will have a knock on effect on house prices and emigration. Ireland is probably too small a country to take such a heavy hit. Our government having the horn for lockdown doesn’t help. Can you imagine if you were a pub owner anywhere in Ireland at the moment?

    I think they jumped the gun too without the lockdown, it would have been easier to make masks mandatory and sanatize the hands regularly and follow the hygiene guidelines.

    But some people are stubborn and there's a lot of anti establishment around and conspiracy theories etc

    Even if one had it in their head's to fake it to make it and go along with the suggestions it would have been a softer blow.
    And when it blows over people could get back to normal again.

    There's a thin line between sanity and insanity.

    Driving through Kilkee, Spanish Point and Lahinch yesterday I notice that people don't give a toss and it's the same as it ever was...

    They're entitled to do as they like, but for the sake of getting rid of this situation people should be more observant of the guidelines.

    Being a lone wolf, I find it easier to do my own thing and avoid the mainstream places.


  • Registered Users Posts: 2,314 ✭✭✭KyussB


    It's a bit of an open-ended question OP, leaving a lot of guesswork as to what 'permanent' means.

    Output Gaps (GDP being below its full potential - analagous to being below Full Employment) always have a permanent affect on the size of GDP, as even when the gap is closed, GDP permanently remains below what it potentially could have been.

    That means every single day that we are below Full Employment, permanent harm is done to our economy and to many of the affected people within it (e.g. to the unemployed and their lifetime finances, most visibly).


    As for Ireland's economy collapsing in a permanent way, so that e.g. we could probably never expect a return to Full Employment...the main way I could see that happening, is if Ireland kept our Public Debt denominated in a foreign currency (e.g. kept it denominated in Euro's), while switching back to the Punt - that's one of the most dangerous possible ways to mismanage a countries finances, as a collapse in the exchange rate, can quickly make the debt unsustainable and set in motion a negative feedback loop, where austerity is forced, which worsens the exchange rate further, worsening debt sustainability further in a loop etc. etc. (this is one of the most common ways that hyperinflation occurs).


  • Registered Users Posts: 1,426 ✭✭✭Neon_Lights


    Well the question there lightspeed is that you know, that well somebody obviously didn't make sure to buy the gas for the balloon during the boom and when the bubble burst they were just all our of €2 shop balloons.

    I reckon the answer to the question would be to get another balloon and try and inflate it, using some form of gas which expends outward pressure in an equal manner to the inward pressure pushed in towards it. I believe it's a Keynesian theory but don't quote me.


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  • Posts: 0 [Deleted User]


    nthclare wrote: »
    I notice that people don't give a toss and it's the same as it ever was...

    They're entitled to do as they like, but for the sake of getting rid of this situation people should be more observant of the guidelines.

    Such people are more omnipresent than you'd think.

    As observed last week on two buses, (one go ahead the other Dublin Bus) travelling through bray and dun laiogre.

    Fast forward today, Sunday 19th I was on a Dublin Bus, heading towards city centre.

    Middle Eastern version of Beavis and Butthead boarded, drivers asked them to put on their masks. They didn't, still allowed to board though. Talking loudly as well. Meh.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    lightspeed wrote:
    Is my outlook too pessimistic or realistic?


    A bit too pessimistic for my liking, I'd like to think eu institutions would kick in before things went down the tubes, then again......

    Tis always good to try not over extend yourself too much with things such as debt, and save whenever you can. recessions come and go, the global economy could completely collapse in the next 5 mins, nobody knows, and it can't be accurately predicted, and the details of each downturn can never be accurately predicted either, such as length of time etc

    Best of luck with the baby, and try not to be too stressed about the economy


  • Registered Users Posts: 32,802 ✭✭✭✭NIMAN


    You can be guaranteed teachers' income won't be curtailed though.

    Quick, time now for you to train up for this cushy job with the amazing wages.

    What's delaying you?


  • Registered Users Posts: 7,699 ✭✭✭saabsaab


    Any economy could collapse if enough critical areas come under pressure at the same time. If the country can adapt to new situations and remain flexible it can mitigate the downsides. Overall I think a massive collapse is unlikely.


  • Registered Users Posts: 8,412 ✭✭✭Markcheese


    Commercial rents are a big issue ,( at least where I'm from ) ,the multinational type companies are reasonably okay ,and some of them are thrilled with the home working and less meetings ,but property developers we're counting on these guys to buy Into their new developments ...
    Cafes and restaurants are feiced ... You can't really expectl to survive paying the same inflated rents with low footfall, and social distancing , expect the bigger chains to renegotiate and the small guys to go to the wall unless they've a sympathetic landlord , I've heard of guys with large commercial portfolios who rather have empty buildings than accept a rent reduction,
    Shops are the same ...

    Slava ukraini 🇺🇦



  • Closed Accounts Posts: 443 ✭✭Hairy Japanese BASTARDS!


    NIMAN wrote: »
    Quick, time now for you to train up for this cushy job with the amazing wages.

    What's delaying you?

    Taking two years out to do my hdip and be qualified to teach maths, physics and chemistry would cost me over €100,000 with lost salary, student tuition fees, loss of pension and employer health insurance.

    It's a very financially rewarding job if you go straight in after college or do a degree where the teaching element is already combined (science teaching in DCU for example).

    If you do science teaching in DCU, the teaching HDIP is combined. Start at 17 and you'll be a qualified teacher at 21 on a permanent job pulling in €34,000.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    If you do science teaching in DCU, the teaching HDIP is combined. Start at 17 and you'll be a qualified teacher at 21 on a permanent job pulling in €34,000.


    And fair play to them, college is far from easy, and in some ways it's a better career path than many private sector ones. I do believe it can be very difficult to be made full time in teaching though, I hear many have to sign on during the summer due to the temporary nature of many posts, so I'm not sure where you're getting that info


  • Registered Users Posts: 7,699 ✭✭✭saabsaab


    The Irish economy is a bit like a small boat on the big sea. It needs to ride the waves as they make it bob up and down in a storm unlike a large ship that can cut through the storm.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    saabsaab wrote: »
    The Irish economy is a bit like a small boat on the big sea. It needs to ride the waves as they make it bob up and down in a storm unlike a large ship that can cut through the storm.

    dont mind that rising tide nonsense, thats more neoclassical ****eolgy


  • Registered Users Posts: 7,699 ✭✭✭saabsaab


    Wanderer78 wrote: »
    dont mind that rising tide nonsense, thats more neoclassical ****eolgy


    No I don't believe in the rising tide raising all boats. Many are holed below the waterline.


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  • Users Awaiting Email Confirmation Posts: 1,105 ✭✭✭Limpy


    Eventually if covid19 stays around the older people or vunerable will have to stay cocooned, take a vaccine or die.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    saabsaab wrote: »
    No I don't believe in the rising tide raising all boats. Many are holed below the waterline.

    or i like to say, the tide has a tenancy to become a tsunami....


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Limpy wrote: »
    Eventually if covid19 stays around the older people or vunerable will have to stay cocooned, take a vaccine or die.

    the elderly are clearly vulnerable in all of this, but this thing is killing relatively healthy young people as well


  • Registered Users Posts: 12,993 ✭✭✭✭Geuze


    Markcheese wrote: »
    Commercial rents are a big issue ........ , I've heard of guys with large commercial portfolios who rather have empty buildings than accept a rent reduction,
    Shops are the same ...


    Why would a landlord leave a building empty?


    One solution is to charge some % of the rates to the owner if the building is empty.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Geuze wrote:
    Why would a landlord leave a building empty?


    Plenty of properties empty around the country, it's sometimes best to do so in the eyes of the landlord.

    Correct me if I'm wrong, but wouldn't a land value tax reduce this likely hood?


  • Registered Users Posts: 647 ✭✭✭eddie73


    Wanderer78 wrote: »
    the elderly are clearly vulnerable in all of this, but this thing is killing relatively healthy young people as well


    Not in significant numbers.

    Every death is a tragedy, but media likes to focus on grim headlines, even if they do not represent the norm. The result of this is the general public's belief that younger people are dying in bigger numbers than they actually are. Factor in co-morbid conditions and this fact is exaggerated even more.

    This virus may be a threat to all of our health, but it is a threat to older people's mortality rather than everyone's.

    We need to calm down about this.


  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    eddie73 wrote:
    We need to calm down about this.


    That's fair enough, the media does have a tendency to sensationalise things, but I have heard interviews from relatively young and healthy people that got it, it's a nasty one, with some resulting in serious mental health issues and possibly long term serious physical issues


  • Registered Users Posts: 26,897 ✭✭✭✭Dempo1


    Probably not but it will be a very, very different economy. High Street in particular is pretty much on its last legs and the Covid-19 crisis has essentially pushed forward its demise by 15 years with online the new norm.

    I'm not entirely convinced the governments propping up of businesses with the wage subsidy scheme TWSS is a sensible approach, I understand restart grants, loans etc to make up for losses during lockdown but paying 85% of payroll for businesses now reopened and trading normally seems bizzare, more alarming however is the scheme also pays 85% payroll of businesses still closed. This is essentially creating a serious false economy. I don't begrudge and supports but they need to be coherent, sensible and geared toward businesses that are viable, certainly not prop up businesses that need to make hard decisions.

    Is maith an scáthán súil charad.




  • Registered Users Posts: 28,703 ✭✭✭✭Wanderer78


    Dempo1 wrote:
    I'm not entirely convinced the governments propping up of businesses with the wage subsidy scheme TWSS is a sensible approach, I understand restart grants, loans etc to make up for losses during lockdown but paying 85% of payroll for businesses now reopened and trading normally seems bizzare, more alarming however is the scheme also pays 85% payroll of businesses still closed. This is essentially creating a serious false economy. I don't begrudge and supports but they need to be coherent, sensible and geared toward businesses that are viable, certainly not prop up businesses that need to make hard decisions.


    Sme's are the largest employers of the state, take away those supports, and we ll have much bigger problems, in fact I'd say we d probably have extremely serious problems. Many things don't make economic sense right now, but economic theory is fairly flaky anyway


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  • Registered Users Posts: 647 ✭✭✭eddie73


    Wanderer78 wrote: »
    That's fair enough, the media does have a tendency to sensationalise things, but I have heard interviews from relatively young and healthy people that got it, it's a nasty one, with some resulting in serious mental health issues and possibly long term serious physical issues

    Yes correct, but still not fatal.

    I also think that we know that it is a bugger of a virus for sure, in terms of how it can knock certain people around, but the mental health issues have to be seen in the context of the entire covid experience, that includes the lock down and the fact that we cannot escape the viruses media coverage at all at any time. This is bound to up the ante for anyone who gets it, or even those who don't or haven't got it.

    To think that it is a clinical issue alone in terms of its effect on mental health is not entirely the full picture imo.

    But let's all stay safe in the meantime for sure.


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