Sometimes you have to be careful what you want. And in the case of Finance Minister Paschal Donohoe, his wishlist would likely have been a situation where the Irish economy rebounded massively from the pandemic with a 15% increase in GDP.
Well, he’s got that one.
To add even more to this dream is the fact that in 2020 Ireland was the only country in the European Union to record an increase in GDP – whose value soared to â¬ 356.9 billion. according to the latest figures from the Central Statistics Office.
But even knowing that our gross domestic product (GDP) figure is heavily skewed by the activities of a small number of very large multinationals, other economic indicators also point to solid growth this year.
The modified gross national income (GNI), the measure that excludes sparkling multinational activities, is expected to increase this year by 4.75% and an additional 5.25% next year.
These are the government’s forecast ahead of the budget, which we will see on Tuesday, October 12.
But they are also approved by the independent Irish Fiscal Advisory Council (IFAC).
The real danger is that the government now believes it is off the hook when it comes to a growth path and decides to spend too much.
At present, EUR 1 billion is already allocated to the new Budget Day spending measures. The government has already pledged to pay an additional 3.7 billion euros from the measures announced previously. And an additional 500 million euros have been reserved for tax measures.
With these kinds of economic forecasts swirling around Merrion Street, it’s no wonder ministers are talking about rewarding public sector workers with bonuses or even vouchers.
But a forecast is only a forecast.
It is strange to forecast further significant economic growth next year in the same week that ministers have said they cannot guarantee that there will not be a shortage of electricity in the next few years.
In China – where they are already experiencing power outages in a region of 100 million people – economists are reducing their growth forecasts for the world’s second-largest economy.
The other big danger is that such a bullish outlook will fuel new expectations of public sector workers, especially at a time when the cost of living is rising by 3pc and may well go further.
Despite these obvious caveats, it is extraordinary to think that the economy can behave so strongly in the years following the pandemic.
The assumptions about 2021 made in September are probably pretty accurate. But with so much economic uncertainty in the mix – from Brexit to inflation to energy constraints – what will happen after that is one to guess.
Nama’s tenure now looks very misguided
Another quarter, another big check from Nama at the Exchequer.
This time around, it’s 250 million euros, with a further 250 million euros to follow in December. The last two payments in 2021, plus the previous payments and the corporate tax paid, will mean that a total of 3.4 billion euros will have been paid to the state by Nama by the end. of this year.
And it does not stop there. The agency plans to hand over an additional 1.25 billion euros in the coming years before closing the shop for good.
How long that might take is another question. Returns to the state so far have been significant, but it’s a shame that there is no sign of a specific plan as to what to do with the money.
Take the $ 500 million by Christmas and combine it with the drug company Perrigo’s $ 300 million tax settlement, and you get a one-time windfall of $ 800 million for the state.
Rather than having it absorbed into general public spending, could it be used for a specific purpose – around housing, infrastructure, job creation incentives, or targeted spending measures in education? or in economically disadvantaged areas?
In Nama’s case, many of us would have been happy if Nama had simply broken even but made a much bigger contribution to solving the housing crisis.
The bottom line for Nama was that it didn’t cost the Exchequer any more money – and the state got its money back. But in truth, he did not get his money back. Every billion euros earned by Nama was 1 billion euros more paid directly to the recapitalization of the banks, and the taxpayer has not yet recovered all of his money.
As for Nama’s workload, it unloaded the fruits at hand very early on to repay its loans and reduce the risk for Ireland Inc after the crash.
But at the end of March 2021, he still had 2,297 promoter loans in arrears for more than 120 days, but on which he had not applied.
This was 12.2 billion euros of the 77 billion euros initial loans taken over by the agency. Nama still costs 1 million euros per week to operate. And it is not known exactly how quickly the best price can be reached for these 2,297 loans which are valued by Nama at 657 million euros.
Separated from these are the 943 outstanding non-performing loans on which Nama has taken enforcement action. They originally represented loans from banks of 6.6 billion euros.
The agency therefore distributes dividends at a time when the need for financing is greater than that of the Exchequer – namely the provision of housing – and it still has a lot of work to do, hence the cost of operation. one million euros per week.
The agency embarked on housing construction when asked to do so several years ago, and says it has been involved in the direct provision of around 12,000 housing units.
Its original mandate to get the best price now seems outdated, and it could have been redirected more effectively to housing some time ago.
Relive the Eircom IPO in 1999
For those of us over a certain age, tomorrow night on RTE One will be a trip down memory lane. For people who lost money buying shares of Eircom when it went public in 1999, this will be something they’d rather forget.
Sold: The Saga of Eircom Actions tells the story of what went wrong – but also examines the how and why.
Hindsight is a wonderful thing, but this show gives a good look at what the major players – in business and in government – were thinking when the business was launched.
It’s a story full of useful lessons, including why you shouldn’t borrow money to buy stocks; why countries should not lightly sell state assets; and why we should never sell state infrastructure, even if we think we are getting a good price for it.
Investors who lost money in the debacle talk about it rather stoically – and remember that some more experienced investors made money.
More than 21 years after the IPO, people seemed to have calmed down. A husband says on the show that he and his wife lost around $ 600. She corrects it to say it was closer to $ 2,000.
The Eircom share floated at â¬ 3.90. Following a stormy general meeting, the board of directors decided to sell its mobile branch – for which shareholders received shares of Vodafone. They then got â¬ 1.80 in cash for their Eircom shares from the Valentia consortium.
When the deal was made with Vodafone in late 2000, shares in the mobile phone company were trading at Â£ 3.31 stg. If you decided to hold your Vodafone shares as a long-term investment for 21 years, this week they were trading at just Â£ 1.15 stg.
Sold: The Saga of Eircom Actions is Monday at 9:35 p.m. on RTE One