The Index »

  • Budget 2012: What have we learned? A 20-point guide

    December 6, 2011 @ 7:15 pm | by Laura Slattery

     1. Budget 2012 is the Twilight: Breaking Dawn of budgets: gruesome set-pieces, unconvincing delivery of lines and should never have been split into two parts.

     2. With no careers available to speak of, there is apparently no need for career guidance counsellors anymore. Hundreds of education posts have been chopped.

     3. Yes, Ryanair is important to the economy, Minister for Finance Michael Noonan acknowledged in a very rare concession to the negotiating hand of Michael O’Leary.

    4. The fuel season now officially lasts 26 and not 32 weeks, says the Government, whose faith in the mildness of September and April will surely come back to haunt them, and us.

    5.  Minister for Public Expenditure Brendan Howlin’s speech was a touch generic – in that he declared that a switch to cheaper generic drugs would save us millions.

    6. Post-speech press conferences will be scheduled later next year, so that ministers who depart the Dáil to attend them are not taunted by the Opposition for knocking off early.

    7. It would not be good if one of Ireland’s expat billionaires were to suddenly go rogue and attack the mother country, as the number of army brigades is set to be cut from three to two.

     8. “Many young men and women now see their future in farming,” according to Noonan – a self-sufficiency that could come in handy when Western civilisation implodes.

     9. Cash fares are dead. Public transport fares will increase next year, but passengers who buy the pre-paid integrated Leap card will, despite the name, be cushioned from most of the jump.

    10.  Private health insurance = rich man’s luxury. The VHI warns its premiums will rise by a staggering 50 per cent as a result of changes to private beds in public hospitals.

    11. It’s no longer especially economical, if indeed it ever was, to have more than two children, as families with three or more kids take the hit on child benefit cuts.

    12. The back-to-school clothing and footwear allowance will no longer be paid to parents of two- and three-year-olds, on the grounds that they don’t go to school.

    13.  On the advice of Nama, upward-only rent reviews are here to stay – a case of “up UORRS” to retailers. It will save taxpayers money, partly because there will be fewer shops.

    14. Public sector spending will be subject to “evidence-based expenditure policy”, which is code for not throwing cash at useless, pointless things.

     15. Sinn Féin’s Mary Lou McDonald accused Labour of “sleeveen politics”. Slang.ie says “sleeveen” implies “slyness, untrustworthiness, and obviously slippery character”.

     16. Noonan enjoys caustic appraisal of the “mental arithmetic” skills of his critics, pausing during his speech to correct various Opposition assertions on the impact of the VAT hike.

    17. By 2014, single parents of children aged 7 will be deemed available for full-time work and if they can’t find affordable after-school childcare, then… well… er…

    18. Cheap supermarket booze is on notice, with the Government signalling that Ireland may follow in the footsteps of Scotland, which unveiled a minimum pricing bill last month.

    19. If only we’d taken fewer duvet days… “Absenteeism is a problem in both the public and private sectors in Ireland,” observed Noonan, to an uncommonly packed Dáil.

    20. “Difficult choices are never easy.” This was an actual sentence spoken in the Dáil on Monday by Taoiseach Enda Kenny. And who can argue with that?

  • Would-be entrepreneurs shun the great shake-out

    May 31, 2011 @ 8:00 am | by Laura Slattery

    Enter the dragons... with presenter Richard Curran. Photo: RTE

    So it turns out the Chinese word for crisis is not actually opportunity.* For some employees facing redundancy this has nevertheless happily proved to be the case. In certain sectors, at certain times, mass layoffs have historically swelled the ranks of start-up firms. Once handed their P45s, redundant workers discovered it was the perfect chance to realise long-held desires to be their own boss. They scrambled through contact lists and made now anachronistic appointments with bank managers – ideally armed with a redundancy cheque as collateral.

    It happened after the 1993 closure of the Digital Electronics Corporation in Galway, which led to the formation of a cluster of indigenous tech firms, sucking in new investment. The still-thriving, Oscar-winning creativity of Ireland’s animation sector was born from the ashes of Sullivan Bluth, the multinational animated movie producer that shut its Dublin doors in 1995. And the demise of aircraft leasing company GPA in the early 1990s is survived by a generation of aviation finance firms.

    New figures from Vision-net suggest that this phenomenon isn’t repeating itself – not yet. The number of people choosing to become a company director for the first time has fallen by more than 40 per cent, according to the business information service company. Its study of Companies Office data found that 4,883 people registered as first-time directors in the first quarter this year, down 31 per cent from 7,062 on the same period in 2010. Since then, the sharp decline – described as “telling” by Vision-net managing director Christine Cullen – has accelerated.

    Timing is everything. Redundancy is a bitter blow at the best of times, but it is during the best of times that such bitterness can be channelled into productive outlets. Digital, Sullivan Bluth and GPA all closed at a time when the only thing on Ireland’s economic horizon was a massive boom. These were skilled workers freed from their contracts during a time of rising employment and nicely surging wages. But post-bust, start-up business models that would have seemed like simply marvellous ideas in 2001 now look like naive fantasies. Where once customers would have lined up, eagerly contributing to the top line, there is only a vacuum.

    Critically, this recession has also been accompanied by a dearth of the one thing even the most innovative of entrepreneurs with the most solid of business plans requires – finance. These are the days when securing a slot on Dragon’s Den is seen not only as a valid strategy, but – for consumer-facing businesses at least – vaguely sensible. It’s a television show, an entertainment. But the banks, after all, are out.

    Starting your own business has always been a risk, but in today’s dysfunctional economy it looks suspiciously like a folly. People who do, against the odds, manage to make their debut as a company director face a business climate that is still very obviously in the throes of a vicious shake-out. In May, companies were declared insolvent at a rate of eight per working day and liquidated at a rate of six per working day. Once it was the construction sector that led the implosion, now it is retail and wholesale firms that are hitting the wall with the greatest haste.

    Vision-net’s figures show that more than one in every two companies are showing signs “consistent with business failure”, by which they mean a decline in profits, tighter cashflow and an over-reliance on bank finance. Companies failing to meet their daily trade and finance commitments are, according to Cullen, having a “real domino effect” on the cashflow and debt repayments of other companies, exacerbating the crisis. The bulk of liquidated companies’ creditors are unsecured, meaning they’re unlikely to be paid what they are owed. It’s a form of contagion that’s hardly conducive for a fledgling start-up to thrive or even survive.

    *Sadly for motivational speakers, the Chinese word for crisis isn’t quite a combination of the characters for “danger” and “opportunity” either.

  • Rejoice! We are free! says the Heritage Foundation

    January 12, 2011 @ 1:15 pm | by Laura Slattery

    Ireland is the seventh freest economy in the world, according to the conservative US thinktank the Heritage Foundation, an organisation for which the ability of millionaires to transform themselves into billionaires unencumbered by anything resembling “government control” – or laws as they are more generally known – is paramount. Ireland, incidentally, which it describes as “mostly free”, came in two spots ahead of the US itself. (The full rankings are listed here.)

    Given that economic management in Ireland has often seemed like an oxymoron lately, I thought it might be a good idea to find out a little more about the kind of ideologues that our Government has managed to impress through the apparent chaos. On a hunch, I turned to the index of Naomi Klein’s book on “disaster capitalism”, The Shock Doctrine. Halliburton, Hamas, Harvard, Hayek, Hemingway… ah, there it was: Heritage Foundation. Pages 14, 255, 289, 295, 355 and 410.

    Klein, who is of the left, describes the Heritage Foundation as “ground zero of Friedmanism”, referring to its slavish following of the beliefs of late free market evangelist Milton Friedman, who would have privatised oxygen if he could. It was the Heritage Foundation that two weeks after the levees were breached in Louisiana came up with a list of Pro-Free-Market Ideas for Responding to Hurricane Katrina – a list packaged as “hurricane relief”, Klein writes, but comprising of such measures as the suspension of laws requiring federal contractors to pay a living wage.

    Let’s see what the Heritage Foundation has to say for itself. On Obama’s plans to reform health care, it is thoroughly alarmed: “The result of so much government control is that health care is one of the most highly regulated sectors of the American economy.” This means “less personal freedom”, it laments. It is similarly hostile to Obama’s reforms to education legislation called the No Child Left Behind act, describing them as “a reckless spending spree”.

    On poverty and inequality, it says poverty, what poverty? “Poor persons in the US have far higher living standards than the public imagines… By his own report, his family is not hungry, and he had sufficient funds in the past year to meet his family’s essential needs. While this individual’s life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians.” The greatest weapon against child poverty, it states, is not a living wage (or indeed a functioning welfare state), but marriage.

    On sex education, well… it’s against it: “Abstinence education programs are effective in reducing sexual activity against enormous pop culture pressures. Alternative comprehensive sex education programs disparage abstinence and teach that casual sex among teenagers is acceptable and desirable.” Freedom only goes so far, then.

    These are the people who just love what we’re doing with the economy.

  • The National Pensions Reserve Fund: an obituary

    November 30, 2010 @ 12:30 am | by Laura Slattery

    The National Pensions Reserve Fund (NPRF), which has died aged nine from infanticide caused by multiple stab wounds, was born under the premise that it would prepare the Irish State for a pensions “time-bomb” due to explode in the decades ahead as Ireland’s population ages inexorably into an impoverished abyss.

    It was the best of what would prove to be a series of generally good times for its creator, then Minister for Finance Charlie McCreevy, who legislated that at least 1 per cent of gross national product would be committed to its coffers each year, on top of the proceeds from the flotation of the much-loved Eircom. This, he said, would pre-fund a rising public sector and State pension bill from 2025 and beyond. There were to be no drawdowns until that date.

    From its official launch in April 2001, when the fund had £5 billion (€6.35 billion) in good old Irish punts to play with, McCreevy proudly declared that he had “no power to give directions to it or to seek to influence its investment mandate in any way”. The academic Patrick Honohan, who would later become governor of the Central Bank, called it “the most important initiative in economic policy for the past decade”. From its birth, however, there were fears that the fund would flirt with potentially disastrous investments, such as dotcoms, which were fashionable at that time. Indeed, the decision to require the fund’s managers to engage in stock-picking rather than simply acting as a passive “index fund” tracking the whole investment market served to push up costs (while making a lot of market types a lot of money).

    Recommendations by Honohan and others that the fund be precluded by law from holding Irish assets in order to prevent “pressure from promoters for the fund to finance worthy-sounding but unviable projects” were not followed. Critics of the fund’s overseers, the National Treasury Management Agency (NTMA), would later point to potential conflicts of interest. One branch of the NTMA, the National Development Finance Agency, was in the business of advising public-private partnerships (PPPs) on how to secure the lowest-cost financing, while the other branch, the NPRF, was figuring out how to maximise the commercial returns.

    The rationale for the “rainy day” fund was consistently questioned. Economists from across the ideological spectrum wondered why McCreevy was intent on setting aside money for the pension fund while at the same time cutting back on infrastructure spending. Its surplus evaporated, the Government was borrowing in order to both save and spend – an economic strategy described as “unique”. In a 2002 election pledge, the Labour Party advocated using billions from the fund to build schools, hospitals and roads, for which it was accused of not taking public and State pensions seriously. But it lost the election and Ireland’s sovereign wealth fund was instead kept for a higher purpose.

    As far as investment performance was concerned, the fund enjoyed some early luck. The time devoted to the recruitment of fund managers in 2001 meant the initial investment was held safely on deposit during that disastrous year for equities. Entirely coincidentally, once the fund managers got their mitts on the money, the fund’s value began to slip back and it lost €763 million by the end of 2002. The State’s distinct lack of an ethical investment policy also proved controversial – tobacco vendors Philip Morris, Imperial Tobacco and British American Tobacco; cluster bomb makers such as Lockheed Martin, Raytheon and Thales; and Iraq war profiteer Halliburton were among its hottest stock picks.

    In 2003, the NPRF pulled itself back into the black. A year later, the fund value crossed the €10 billion mark, while 2005 was stellar all round as it pocketed returns of almost 20 per cent. By 2006, it was busy getting stuck into the burgeoning bubble in private equity. In July 2006, then Minister for Finance Brian Cowen denied suggestions that the Irish economy was a “headless chicken”, citing the NPRF as one of “the hallmarks of an economy which is prudentially and well managed”. All had changed utterly by 2008, when Minister for Finance Brian Lenihan signalled that he was reviewing payments to the fund due to the State’s mounting deficit. But the fund would not be “raided” to prop up public finances, he pledged. “I don’t succumb to temptations like that.” Michael Somers, the NTMA chief executive at that time, added “future generations will thank us” for the foresight of maintaining “a big kitty”.

    As Ireland’s banks lurched from crisis to crisis, the NPRF’s status as the sole evidence of Irish economic prudence began to look in even greater jeopardy. In March 2009, the Government used emergency legislation to give €3.5 billion each to AIB and Bank of Ireland from the fund in exchange for preference shares. The bank recapitalisation project was in full, cash-devouring swing. In 2010, an additional State investment of €3.7 billion was assigned to AIB, while on November 28th, in a fatal blow, the fund was further drained of “approximately” €10 billion in order to prop up Ireland’s ”black hole” banks. There would be no schools, hospitals and roads, no NPRF-funded stimulus and pretty much no pre-funding of State pensions. The liquidation was set to begin.

    From a total fund of almost €25 billion, just €4.2 billion remained in the “discretionary” part of the pension pot, with no new influx of money on the heavily indebted horizon. The fund’s passing was nevertheless marred by the insistence in official quarters that the monies invested in the banks would one day secure an investment return for the fund and maybe even allow it to fulfil its original purpose. The demographic pensions “time-bomb”, which will see the ratio of workers to pensioners shift from five-to-one to two-to-one by the middle of the century, continues to tick down as before.

    National Pensions Reserve Fund, born April 2001, died November 28th, 2010; survived by a sister, Nama.

  • Dial D-A-I-L for economic carnage

    November 24, 2010 @ 2:02 pm | by Laura Slattery

    “What can the Government do to boost growth?” it asks on a fold-it-and-keep wallet-sized summary of “the National Recovery Plan, 2011-2014″. There will be plenty of room for it in our wallets anyway after it’s finished mopping up its mess.

    Well, it’s going to start by hacking 24,750 jobs out of the public sector and cutting the minimum wage by €1 an hour to €7.65 (which will inevitably have the knock-on effect of deflating the salaries of all low- and middle-income earners). Not permanently employed but have managed to scrape together enough hours to get by? The point at which you will start paying tax will drop to €15,300, a fall of €3,000, by 2014. All tax credits and bands will drop by an aggregate 16.5 per cent by the end of the “recovery” period.

    It’s going to follow this up by “reform[ing the] welfare system to incentivise work and eliminate unemployment traps”, which is fantastic, as we all know it’s merely the lack of incentive to get out of bed in the morning, not the jobless economic deep-freeze, that’s causing all our woes. Social welfare expenditure will be €3 billion lower a year by 2014 – the details of this particular misery have not yet been spelled out.

    Thinking of waiting out the recession with, I don’t know, a decade’s worth of education? That’s going to cost you €2,000 a year, as annual student fees increase 33 per cent.

    But if salaries and welfare payments plummet, then that’s okay, right, because we’ll be more “competitive” and things in the shops with be a lot cheaper? Hmm. Not so fast. From 2013, there will be an increase in the standard rate of VAT – the tax that hits poorest people most – from 21 per cent to 22 per cent, with a further increase to 23 per cent in 2014.

    There’s lots of insulting guff inspiring words in here about “a blueprint for a return to sustainable growth” and “identifying the areas of economic activity” that will allegedly provide employment. There’s also mention of confidence… vitality… dynamism… proportionate adjustment. The Business Expansion Scheme will be replaced by something called the Business Investments Targeting Employment Scheme, aka BITES. I’m not sure they’ve thought that one through.

    And then: “We must all accept our share of the burden so that we can collectively share in the fruits that will undoubtedly flow from solving our current problems.” So, what do you think? Do you have confidence that one day you will get to share in these magical, future fruits? Or has the Irish economy already rotted away in the stale IMF air?

  • Still waiting for “new faces” in Government, S&P downgrades Ireland

    @ 7:00 am | by Laura Slattery

    Poor Frank Gill. The Standard & Poor’s sovereign debt analyst was one of the first people to set our democracy alarm bells ringing when in March 2009 he surmised there was a need for “new faces” in government. This rare example of simultaneous perceptiveness and gall outraged the Dáil, which can usually only muster up the latter. In any case, that was way back when S&P’s best brains were cutting Ireland’s credit rating to a now covetable ”AA+”. Things have moved on, in the markets’ eyes at least. Shortly before midnight last night, the ratings agency downgraded Ireland from “AA-” to “A”, outlook very much negative.

    And, no, an A is not good, as I wrote here, back when it was still possible to be glib about these things.

    The statement by Standard & Poor’s makes little mention of political instability, with just a quick, throwaway blackmail about Ireland’s credit ratings coming under “renewed pressure in the short term should the domestic policy consensus weaken”. You will be shocked to discover that neither the sensitivities of Dermot Ahern and Noel Dempsey, nor Paul Gogarty and his unpredictable childcare arrangements, nor Brian Cowen’s sexist remark about Joan Burton, make the cut. Instead, Frank Gill emphasises that the lower ratings “reflect our view that the Irish government will have to shoulder additional costs associated with further capital injections into Ireland’s troubled banking system”. By Irish government, he means us.

    The statement says lots of other nasty things too, although none of this will surprise anyone at this late stage of the game, what with Bank of Ireland set to join Anglo Irish Bank, AIB et al on the roster of failed, nationalised institutions that we will desperately try to offload on anyone rich enough and brave enough.

    Despite the speed at which events are unravelling, this may not happen overnight. ”In our view, Ireland’s banking system will take several years to downsize,” says Gill. “The outlook for future costs to the government from financial retrenchment remains uncertain.” (Some commentators are talking about a quarter of a trillion, all in.) Meanwhile, ”the high overhang of private debt, fiscal austerity and the uneven outlook for external demand in Europe” means that S&P now expects “close to zero nominal GDP growth for 2011 and 2012″.

    Frank’s still waiting for his “new faces”, as are we. In some ways, it’s comforting that an organisation whose clients are the power-crazed, plutocratic institutions we know as “bondholders” has been even more naive than local democracy fans when it comes to the office-clinging abilities of Fianna Fáil. On the other hand, a general election or no general election – pffft. Worryingly, it now seems that bit more irrelevant to the credit ratings agencies and their institutional investor paymasters.

    Standard & Poor’s will hold a teleconference on its downgrade decision at 3.30 pm today, although frankly I’m planning on training the full leaden weight of my gloom in the direction of the gothic horror that is the four-year austerity plan – upon which you will find news updates and commentary at www.irishtimes.com, here at The Index blog and on twitter.com/IrishTimesBiz.

  • Cowen accepts the bailout but not the responsibility

    November 21, 2010 @ 9:46 pm | by Laura Slattery

    As a result of an ill-judged edit, viewers of the national broadcaster missed the liveliest and most telling part of the press conference held tonight at Government Buildings by the current Taoiseach Brian Cowen and the current Minister for Finance Brian Lenihan. TV3 host and Irish Times columnist Vincent Browne asked Cowen if he accepted that he was to blame for “screwing up the country”; that he more than anyone else was responsible for Ireland’s economic catastrophe and that his continued presence in office was “a liability” to the nation.

    “I don’t accept that at all,” replied Cowen, grumpily. “I don’t accept your contention [or] the premise to your question that I’m the bogeyman you’re looking for.”

    Minutes earlier, a Bloomberg television journalist who asked if Cowen had ever thought of packing it in was told that the process of electing a Taoiseach was a parliamentary matter… mumble, jargon, mumble. As for whether or not he would lead Fianna Fáil into the next election, “obviously that is my intention”.  All of this enraged Browne who temporarily became the voice of a nation’s anger about the bizarre lack of contrition on the part of a Taoiseach who insisted there was a rationale for every decision (that he would explain to Browne on another occasion if he wanted) and that every decision the Government had made was “in the national interest”. “I have always taken full responsibility for my actions,” said Cowen, lost in doublethink and seeming almost resentful of the television cameras.

    He was also unable to answer Browne’s inquiry about the estimated level of Irish citizens’ future debt burden. This, he explained, would depend on the size of the drawdown on the assistance offered, which in turn would hang on further stress-testing of the black-hole-banks. Something to look forward to, then.

    There is at this point no confirmation on the total size of the bailout from the European Commission, the International Monetary Fund (IMF) and the European Central Bank (plus some bilateral loans from the UK and Sweden thrown in for good measure). Lenihan earlier in the day said it would not be “a three-figure sum”, by which he really meant it would not be a 12-figure sum of €100,000,000,000 or more. In other words, it will be less than €100 billion, according to the Government. EU sources and UK banking analysts say something similar, in case the Government’s best guesses are no longer enough.

    The only thing the press conference confirmed tonight, amid a blaze of obfuscation, was that Ireland will be taking the money. As a result, Irish public finances, for the next three years at least, will be subject to “regular reviews” by the external monitors that control the purse-strings. Whether the Government will be taking responsibility – as the concept of responsibility is understood by the (mostly livid) Irish viewers of the BBC and Sky (which kindly broadcast the press conference in full) – is as yet uncertain.

    It’s an infinitesimally small comfort, but Browne’s series of questions, transmitted live to millions across Europe, will at least have shown internationally that Irish people are not okay with incompetence, not sanguine about fecklessness, not calmly accepting of economic negligence. This, in the long run, can only improve our reputation. Shortly after Browne’s indignant contribution, the two Brians exited stage left. TV3, for its part, is broadcasting a special edition of Tonight with Vincent Browne at 10.30 pm, where the rational apoplexy will continue.

  • The export factor

    November 19, 2010 @ 5:12 pm | by Laura Slattery

    Another press release reaches us from the Department of Enterprise, Trade and Innovation. Is it just the thing to brighten up our afternoons? According to Minister of State for Trade and Commerce Billy Kelleher, “Ireland’s enterprise economy is now in a strong growth trend”, with figures (from the CSO) showing a 4 per cent year-on-year rise in exports in September. “The recovery in our economy over recent months has been maintained,” Kelleher declares.

    IMF? Here? Someone should have said, we could have given the place a bit of a dust and got some fancy biscuits in.

    The figures show that “the Government’s strategy in investing in an export-led economic recovery is the right one”, continues Kelleher, taking the credit. Maybe Frank Ryan, Enterprise Ireland’s chief executive, is right when he says Ireland will be the “comeback kid” of western economies – although that was, admittedly, a few weeks ago, and a few weeks, as the saying goes, is a long time in nationally humiliating sovereign debt crises.

    Now for some more export-related analysis. New research from PMCA Economic Consulting crunches the numbers on a “statistically stable, long run and meaningful relationship” between export performance and the creation of new employment. Based on the period from 1997 to 2010, a 10 per cent increase in the value of exports from Ireland is associated with a 4.1 per cent increase in employment, or potentially 76,000-plus new jobs, says PMCA’s Pat McCloughan. Good news, especially as “economists have traditionally tended to view exports as having a limited impact on job creation”, he adds.

    However, exports are only any use if we have someone at the other end who’s prepared to pay for the stuff. Here, the mood darkens. “The effects of deficit cuts are likely to be even more painful if they occur simultaneously across many countries,” says McCloughan. “This is precisely the international environment in which Ireland currently finds itself.”

  • The red line in corporate communications

    November 18, 2010 @ 11:16 pm | by Laura Slattery

    After two years of cuts and cut-threats; after a week of high-level Government stuttering, evasiveness and alleged ”pejorative terms”; after days of being left in the dark, finally the nation’s parents, pensioners, students and long-term sick have the reasurrance that they and their fellow citizens have been crying out for. Yes, the Government has promised us that the 12.5 per cent corporation tax rate will remain intact.

    Batt O’Keeffe sent out a press release saying the Government was “not for turning”. (This instantly made me think that it will be.) Mary Coughlan told the Dáil it was non-negotiable. (I don’t know about you, but I’m starting to think it is.) And Brian Lenihan told RTÉ that the sacred corporation tax rate was an “absolute red line” (that’s beginning to blur).

    Notwithstanding all this collective defiance, the front page of The Financial Times tomorrow asserts that “Ireland faces tax showdown”. And despite the complaint by the former editor of The Sun, Kelvin MacKenzie, on the BBC’s Question Time that Ireland is “undercutting” the UK corporate tax rate – “I want them to be a good neighbour to us and stop trying to nick companies out of this country” – it is, of course, the Germans and the French, and not the British, who would like Ireland’s corporation tax to kowtow less to transatlantic business interests.

    The American Chamber of Commerce, which next Thursday will feed Brian Lenihan a Thanksgiving lunch in exchange for more supportive words, was quick to reiterate its belief that any increase in the corporation tax rate would damage the economy and result in an exodus of job-providing US entities, some of which are quite adept at utilising tax avoidance schemes to bypass the 12.5 per cent rate anyway. But not everyone agrees that this precise rate is an economic saviour to be protected at all costs. Last month, Don DeGrazia, the US-based former chairman of global accountancy network Integra International, helpfully quantified matters by noting if Ireland’s corporate tax rate was increased to 15 or 16 per cent, “Ireland would still be competitive and thus attractive” to inward investors.

    Never mind all that for the moment. The 12.5 per cent rate, despite its sharp ideological edge, has become a sticking point – a symbol of our sovereignty, behind which Ireland’s ministers will unite, on-message, for the day, as it plays what The Guardian dubs “geo-political hardball”. Its posturing is also, presumably, aimed at any multinationals that, right at this exact moment, happen to be deciding where they should plump a job-spinning factory.

    But regardless of how vital the 12.5 per cent rate is, or isn’t, to employment, it is curious that the Government is less willing and able to make a similarly concerted, Cabinet-wide attempt to soothe the fears and anger of Irish citizens worried about the safety of their deposits, the status of their mortgage arrears, the future level of their pensions and the state of their schools and hospitals. On balance, I think I preferred it when it was still considered worth the Government’s while to make (even obviously empty) promises to the Irish people. The alternative is that we’re no longer worth lying to, as it, the IMF and European officials just thrash it out amongst themselves.

  • The euro zone’s contagion calendar

    November 15, 2010 @ 7:48 pm | by Laura Slattery

    Today (Nov 15th): Is the bailout on or off? Well, that depends on what you mean by “bailout” – according to Brian Cowen, it’s a “pejorative term”. He prefers to say that the Government is “engaging constructively with partners”. Fine Gael finance spokesman Michael Noonan, however, believes the Government is “fighting a rearguard action for appearances purposes”. Bond markets chipped in by taking the pressure off Irish bond yields – not, however, a sign that the crisis has been averted, but instead likely to reflect investor expectations of a rescue as early as…

    Tomorrow (Nov 16th): Could Ireland run out of its metaphorical road? European finance ministers including Brian Lenihan will meet in Brussels in what is set to be a critical meeting for Ireland – the market speculation is that Cowen’s constructive engagement could turn into something a little more concrete once this meeting wraps up. The Cabinet is also due to meet “very early” tomorrow morning to discuss the four-year plan. Meanwhile, Greece is due to hold a debt auction of 26-week bills.

    Wednesday (Nov 17th):  The EU finance ministers’ shindig continues, mindful perhaps of the words of German chancellor Angela Merkel. “If the euro fails, then Europe fails.”

     Thursday (Nov 18th): Spain, which fears contagion from the Irish and Portuguese debt crises, is due to hold a debt auction of 10-year and 30-year bonds, while Greece, which has been there and bought the bailout T-shirt, will announce its 2011 budget.

    Early next week (Nov 22nd-24th): According to comments today by Minister for Justice Dermot Ahern, this is when the Government will set out its four-year budget plan, which bailout or no bailout, is on track to take €15 billion out of the economy through spending cuts and tax increases.

    Nov 25th: Voters get a chance to vent their feelings through the long-lost therapy of democracy in the Donegal South West byelection.

    Nov 26th: Portugal takes its final vote in parliament on its 2011 austerity budget. Portuguese finance minister Fernando Teixeira dos Santos, who was quoted in the Financial Times saying there was a high risk Lisbon would have to seek aid, yesterday clarified that such a request was “not imminent”, while at the same time he not-so-subtly urged Ireland to get the hint and dip into the European Financial Stability Facility. (There’s plenty to go round.)

    Dec 7th: Brian Lenihan is scheduled to stand up in the Dáil to announce details of Budget 2011, for which he has pencilled in €6 billion worth of cuts. The standard smiling budget briefcase photo op seems doubtful at this stage.

    July 2011: Government ministers have repeatedly said that Ireland is funded up until mid-2011. If by some strange turn of events no bailout (sorry, Brian) occurs before this month, the National Treasury Management Agency (NTMA) will have to return to capital markets in an attempt to raise fresh funds if it wants to keep the lights on.


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