14 January 2010 Edition
The 26-County economy in 2010
The state we’re in
BY ROBBIE SMYTH
€1.64 TRILLION is the total level of debt this January in the 26-County economy. Don’t worry, though: €1 trillion of that is just the estimated liabilities of firms in Dublin’s International Financial Services Centre. We only need to worry about the other €640 billion debt!
These figures come on top of a year when unemployment rose 46% in 2009. Every day, 210 people were made redundant, with an average of 365 new people signing on every day in 2009. Manufacturing output fell, exports were static.
On the plus side, prices are falling, with an 8% decrease in gas prices announced last week, though we still have to pay one of the highest gas tariffs in the EU. Electricity prices are similarly higher than the EU average, but falling.
But despite all of this and while many of our economic neighbours and competitors implement massive economic stimulus packages, there is still no clear strategy for growing the Irish economy in 2010. Bail-outs for banks and builders yes, but Irish business will in 2010 find it at best no worse than 2009, which is hardly a recipe for success. So get ready for a return to creeping unemployment, growing poverty and an Irish business sector underperforming our international competitors. The “Yes to Recovery” Lisbon Treaty slogans seem a long way off now.
Falling tax-take growing debt
Taxpayers contributed €33 billion to Government coffers in 2009, down from €40.7 billion in 2008. The tax-take was at a similar level to 2003 rates. Government spending in 2009, though cut in the April and December Budgets, still had to include €3.5 billion being poured into Anglo Irish Bank, with a similar sum invested in shoring up AIB and Bank of Ireland and a billion euro increase in the cost of Government borrowing.
Our international credit status deteriorated seriously, so the Government deficit of spending over revenue was a massive €11.9 billion extra debt taken on by the Irish Government during 2009.
The Department of Finance is predicting a further fall in tax revenue for 2010. Right now, the forecast is for a yearly tax-take of €31.9 billion. Bear in mind, though, that Department of Finance tax forecasts have never been accurate; whether it’s a year of boom or bust, they have always got it wrong.
Total 26-County debt at the end of 2009 amounted to €1.64 trillion. This includes all forms of debt in the Irish economy, from Government borrowing to NAMA, mortgages, credit cards and credit unions.
Redundancies and insolvency
77,101 redundancies were notified to the Department of Enterprise Trade and Employment in 2009. That breaks down to 210 people losing their job every day. It was a 90% increase on the number recorded for 2008.
29,952 jobs were lost in the service industries, a knock-on effect of less money in the economy as jobs were lost in other sectors such as building and civil engineering (nearly 19,000 jobs lost) or manufacturing (almost 17,000 jobs lost).
The figures don’t even count all jobs lost in the economy in 2009, as they only apply to where a worker received statutory redundancy payments and who had at least two years’ service with their employer.
Enterprise Ireland’s end-of-year statement showed a fall of 19,000 in the amount of jobs supported by the agency in 2009, while employment in IDA Ireland-supported firms fell by 10%, or 13,400 jobs.
1,406 26-County firms became insolvent in 2009, an increase of 82% on 2008, with just 124 going into receivership, so less than 10% have any chance of recovery.
The total number of people signing on at the end of December 2009 showed an increase of 133,577 on December 2008, with 423,595 people now signing on, a 46.1% increase. This came after a 70.2% increase in unemployment in 2008.
According to the Central Statistics Office, the standardised rate of unemployment for the 26 Counties in December 2009 was 12.5%.
Exports and manufacturing
The value of goods and services exported out of the 26 Counties in 2009 was €154 billion, a fall of 1% on 2008. However, much of this figure is dominated by multinational firms. Figures from the Irish Exporters’ Association (IEA) show that indigenous exports of goods fell 9% to €13 billion. This group was hit in particular by the currency fluctuations between the euro and sterling.
The only significant growth area in exports in 2009 was in the chemical and pharmaceutical sectors, which grew 12%, while medical device exports grew by 4%.
Manufacturing decreased by 9.1% in the 12 months between November 2008 and November 2009. Computer, electronic and optical products fell by 36%, with food products manufacturing falling by 12.5%. One other noteworthy trend was the difference between traditional and new areas of economic activity. The traditional sector fell by 17.7% compared to a 3.7% fall in what the CSO term the “modern sector”.
The modern sector is comprised of chemical, pharmaceutical, computers, electronic, optical, recorded media and medical.
Income and earnings
New CSO data released last week on regional incomes shows disparities across the 26 Counties. Based on the most recent data from 2007, people in Dublin had the highest regional incomes, 10.8% higher than the 26-County average, while in the Midlands disposable income was 8.8% below the 26-County average. Dublin, Kildare, Limerick and Meath had disposable incomes higher than the state average.
Average hourly earnings in the second half of 2009 were €21.90 in the second quarter of 2009, up slightly on the same quarter in 2008 when average hourly earnings were €21.51. Earnings fell 13.3% in the financial and real estate sectors, rising 1% in education. Private sector earnings fell by 3.1% while in the public sector wages rose 1.3%. These figures do not take account of the March 2009 public sector pension levy.
2009 The state we’re in
Tax revenue for 2009
Fall on 2008 tax revenue
Interest payments on the national debt last year
Total value of exports of goods and services
Total number of people now signing on at the end of 2009
Percentage increase in unemployment in 2009
Number of redundancies recorded in 26 Counties for 2009
Rise in numbers signing on between December 2008 and 2009
Percentage increase in unemployment in 2008
Standardised rate of 26-County unemployment December 2009
Total debt in the 26 Counties
Total number of insolvencies in 2009
• NEXT WEEK: Robbie Smyth analyses the state of the Six-County economy and assesses the prospects for the all-island economy
An Phoblacht Magazine
AN PHOBLACHT MAGAZINE:
- The first edition of this new magazine will feature a 10 page special on the life and legacy of our leader Martin McGuinness to mark the first anniversary of his untimely passing.
- It will include a personal reminiscence by Gerry Adams and contributions from the McGuinness family.
- There will also be an exclusive interview with our new Uachtarán Mary Lou McDonald.