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ESRI overoptimistic on economic growth? Private sector goose cooked?


patslatt

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See ESRI predicts 1.8pc growth this year, urges Government to continue with austerity - Independent.ie

ESRI's overoptimistic economic forecast is unfazed by well known headwinds of the EU recession,UK snailpace growth and continued domestic austerity.

Another headwind is that taxation may kill the private sector goose that lays the golden egg-the truly market oriented,incentivised private sector,just over a third of the economy.In the 2011 national accounts at CSO,the latest dilatory annual figures available,government spending was €74 billion,a whopping 58% of Gross National Income (GNI) of €128 billion*,with the private sector balance of 42% being €54 billion.Government spending included public sector pay and pensions of €19 billion,old age pensions,social welfare and government capital spending which is largely private sector contracts or semi-state.

Given that public sector trade union opposition to pay cuts and redundancies is highly organised and militant, austerity will likely continue largely to fall largely on the market oriented private sector in continuing tax increases. Say tax increases of €4.5 billion were applied to the market oriented private sector of €54 billion in the next four years,that would be a hit of 8%,which could well reduce it to say €50 billion. Could that €50 billion keep the 48% larger public sector levitating? Could incentives be so damaged by more increases of taxation-which is already well beyond diminishing returns-that thousands of successful businesses and business people become defeatist?

*This is a higher figure than World Bank international comparisons,based on per capita 2011 Irish GNI of $39,150 x approximate foreign exchange rate for euro of €0.72 x population of 4.2 million = €118 billion. The latter figure looks considerably worse for the situation of the private sector.
 
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The Field Marshal

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Why on earth should anybody pay attention to the govt funded ESRI?

This entity is not independant and produces data which is dependant on Irish governemnt funding.

As such it can never be relied upon to be independant of Irish govt policy which as everybody knows is now dictated to by non Irish vested interests.
 

greagh

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Its a sad day when the only friend the private sector has is the troika,the ESRI only publishes data which suits its insider purpose lies damned lies and statistics !
 

Taxi Driver

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What an abuse of numbers. Has the OP ever heard of the circular flow? Yes, the money collected by the government comes from the private sector but equally the money spent by the government goes into the private sector.
 

tigerben

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The ERSI forecast on the ecomony is as about as reliable as the RTE/BBC weather forecasts. Take with a pinch of salt and wait for the revised forecast and excuses in a few months blaming outside factors beyond the control of Ireland and the fact that growth would have happened put for the EU wide Resession !
 

Burnout

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I have a life.
Which figures was it based on this time, GNP / GDP two different readings. Bottom line a few jobs in the finance sector in Dublin does not make for 'green shoots going forward' in Ireland. The 400'000+ unemployed still have no jobs and most will never work again for a livable wage that pays their bills and their way in society.

I reckon that no matter what spin you put on it it will be decades before this island gets back to any comfortable normality. To put it bluntly all the older people in debt have to die and the younger generation will have to have less kids. There is no money been generated now for later. It is all going for debt payment. TGIF
 

Burnout

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I have a life.
Why on earth should anybody pay attention to the govt funded ESRI?

This entity is not independant and produces data which is dependant on Irish governemnt funding.

As such it can never be relied upon to be independant of Irish govt policy which as everybody knows is now dictated to by non Irish vested interests.
I do not mean to be off topic but the David McW article on the isseuing of new banking licences should be looked at as some sort of new thinking on the matter of spending:

Wanted: smart new bank that gives us the credit we’re due | David McWilliams

So where is the opportunity? There is an enormous opportunity for a new bank to come into Ireland that can extend working capital to decent businesses. It would seem to be obvious for the State to make a few new banking licences available and then actively go out and solicit business. New capital will dramatically increase the potential of this country.
 

patslatt

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What an abuse of numbers. Has the OP ever heard of the circular flow? Yes, the money collected by the government comes from the private sector but equally the money spent by the government goes into the private sector.
Bureaucratic contracts of government are mainly an exercise in red tape so complex that companies in that field are specialists in red tape-hardly a market oriented sector. Likewise,pensions and social welfare are not market oriented,unlike private sector wages and salaries that must be earned in the market. You missed the whole point of the OP,that the market oriented private sector is being strangled by a public sector twice its size.
 

Crazy horse 6

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It's a classic case of talking up the economy, it's going on everywhere even though things are desperate out there.
 

Crazy horse 6

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Why on earth should anybody pay attention to the govt funded ESRI?

This entity is not independant and produces data which is dependant on Irish governemnt funding.

As such it can never be relied upon to be independant of Irish govt policy which as everybody knows is now dictated to by non Irish vested interests.
Pravda put their figures over as gospel.
 

Goa Tse

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I'd take anything the ESRI says with a large pinch of salt, this is just austerity-porn by the very same media organ that fuelled the property bubble.
 

Analyzer

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The ESRI and Pravda, are both in the business of pumping up consumer optimism, for the sake of the regime of the day.
 

zakalwe1

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this is costing us financially.

our contribution to the EU is based on GDP not GNP so we are paying more than we can really afford.

also, the targets for foreign aid are based on GDP so the likes of Bono et al will criticise us based on a higher figure for national income than we really have.
 
D

Deleted member 23684

The ERSI forecast on the ecomony is as about as reliable as the RTE/BBC weather forecasts.
Very unfair. Weather forecasts are often correct and Met Eireann do not check with Govt as to what should be in the forecast.

ESRI should be abolished. Completely useless and research quite amateurish. Do they have any really top class economists?
 

The Field Marshal

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What an abuse of numbers. Has the OP ever heard of the circular flow? Yes, the money collected by the government comes from the private sector but equally the money spent by the government goes into the private sector.
A circular govt to private sector flow only works in an economy where govt expenditure and activity comprise less than 50% of overall activity.

In Ireland that does not now happen and you have govt dependent primarily on foreign borrowings,FDI and a domestic economy in recession.

This is creating not a circular economy but a whirlpool economy wherein an extremely expensive and overstaffed state funded sector continually sucks into the centre the natural prosperity that should accrue to the average citizen in a vibrant economy.

The result is rising unemployment due to a shrinking domestic economy, rising taxes and continued economic stagnation.

___
 

Burnout

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I have a life.
......

The result is rising unemployment due to a shrinking domestic economy, rising taxes and continued economic stagnation.

___
But we still need 166 TD's to be in comfy well padded seats. Says it all really.
 

twokidsmanybruises

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Do they have any really top class economists?
They did, at least from time to time. Internal politics have banjaxed them. It's a pity, the establishment of the ESRI was a good idea, and there's still a need for objective, disinterested research and analysis. They should have been obliged to source at least 50% of their revenue from sectors other than the state.
 

Analyzer

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A circular govt to private sector flow only works in an economy where govt expenditure and activity comprise less than 50% of overall activity.

In Ireland that does not now happen and you have govt dependent primarily on foreign borrowings,FDI and a domestic economy in recession.

This is creating not a circular economy but a whirlpool economy wherein an extremely expensive and overstaffed state funded sector continually sucks into the centre the natural prosperity that should accrue to the average citizen in a vibrant economy.

The result is rising unemployment due to a shrinking domestic economy, rising taxes and continued economic stagnation.

___
A whirlpool economy. That would be a good description of what is occurring. Contraction, and then more contraction. And state agencies trying to find ways to widen their size of the pie.

But before this we were a Ponzi economy. It was expansion based on increasing debt, and "celebrating" the new wealth that came from expanding the ponzi scheme.

Maybe a "whirlpool eceonomy" is what you get when a Ponzi economy collapses.
 

Andycap

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A circular govt to private sector flow only works in an economy where govt expenditure and activity comprise less than 50% of overall activity.

In Ireland that does not now happen and you have govt dependent primarily on foreign borrowings,FDI and a domestic economy in recession.

This is creating not a circular economy but a whirlpool economy wherein an extremely expensive and overstaffed state funded sector continually sucks into the centre the natural prosperity that should accrue to the average citizen in a vibrant economy.

The result is rising unemployment due to a shrinking domestic economy, rising taxes and continued economic stagnation.

___
Whirlpool make great washing machines. Can't fault them for that.
 

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