This post examines Budget 2011. It goes behind the predictable public anger about “poor paying for the mistakes of the rich” to see what the Budget actually brought in. About one third of the €6bn in savings comes from important income tax reform, but another third comes from one-off windfalls that cannot be replicated. The final third comes from savings in public expenditure, but this is below expectations, more than likely due to the restrictions of the Croke Park Deal. While I am more optimistic now than before about reaching 2015 targets, it is in the area of current expenditure that the toughest work lies ahead.
Following Minister Lenihan’s speech last week on the next Budget, this post takes stock of the latest estimates of receipts and expenditure and puts the progress so far in reducing the budget deficit in a ten-year perspective. It then outlines eight things that need to happen over the coming five years, in order to get the deficit back down under 4%.
This post outlines a scenario for Ireland’s government finances out to 2015. Even with aggressive productivity targets for areas of current expenditure, the deficit is likely to be above 4% of GDP by 2015, while the national debt will again be larger than national income and take up one-fifth of all tax revenues. Grounds for optimism – and pessimism – and alternative scenarios are also explored.
