Irish national debt per person highest in the eu

Delboy

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Go team Ireland!

EU/ECB/IMF solidarity during the crash (with the Bondholders) helped get us to the top. The main thing that jumps out at me from that is Belgium...how did they get there :confused:
 

Brendan Burgess

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Hi Delboy

You mean with the depositors I presume? Guaranteeing retail deposits has added about €30 billion to €40 billion to our national debt.

We would still be at €164 billion.

Without it we would be at about €34 billion, still the third highest.

Brendan
 

Firefly

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Over 6bn spent servicing our national debt last year. That builds a lot of houses, or as some would prefer, increases a lot of wages :rolleyes:
 

TheBigShort

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The question is, what to do about it? On current economic projections Irelands national debt as a % of GDP/GNI is forecast to fall to 59%/86% by 2021.

What is the ideal % rates for those indicators? 59% GDP complies with Fiscal pact....im not sure about GNI?
 

TheBigShort

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You could do that but where would you cut spending?
Bearing in mind as @Opus2018 correctly pointed out in another thread, the current account has been running a surplus for a few years now, even with increases in spending.
 

Purple

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The current account is only in surplus due to windfall corporation tax receipts. One way or another that will change over the next 5-10 years. We should not be factoring that in to our current account spending at all.
I'd like to see a balanced budget excluding corporation taxes with all corporation tax receipts coming off our debt. Long term current account commitments should only be made if there is sustainable and stable long term tax receipts to pay for them.
 

TheBigShort

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The current account surplus for 2019 is €5.5bn. Even taking out the €1bn 'windfall' that still leaves €4.5bn surplus.
So what would the €4.5bn be used for? To pay down national debt?
 

Purple

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The receipts from the Multinationals accounted for 7% of our total tax take this year and 80% of that (5.6% of total) came from 10 companies. I don't consider that sustainable.
 

TheBigShort

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The receipts from the Multinationals accounted for 7% of our total tax take this year and 80% of that (5.6% of total) came from 10 companies. I don't consider that sustainable.
True. While I dont necessarily disagree with the notion, the practicalities of what you would like to do in the context of the available resources need to be considered. Effectively it would cancel all capital expenditure on infrastructure or impose higher taxes on everyone.
Or cut current budget to such an extent that an innumerable amount of services would have to be cancelled.
This would drive the economy into recession, if not, depression.
 

Opus2018

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The question is, what to do about it? On current economic projections Irelands national debt as a % of GDP/GNI is forecast to fall to 59%/86% by 2021.

What is the ideal % rates for those indicators? 59% GDP complies with Fiscal pact....im not sure about GNI?
The government wants to get down to 40%-45% for a debt/GDP ratio in the longer term, given our unique circumstances (level of multi nationals etc.).

Regards,

Opus 2018.
 

BilliamD75

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The question is, what to do about it? On current economic projections Irelands national debt as a % of GDP/GNI is forecast to fall to 59%/86% by 2021.

What is the ideal % rates for those indicators? 59% GDP complies with Fiscal pact....im not sure about GNI?
There is very little the government can do about it, its still 200 billion with 6 billion interest, we cannot inflate our way out of the debt as the euro is not our currency unless the ecb buys all the bonds and creates a euro bond the interest portion will explode when the ecb offloads on maturity, raise taxes to pay for it, more deflation, a sovereign debt crisis will start in Italy and consume the euro maybe
 

Protocol

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You could do that but where would you cut spending?
I would not cut overall spending, I don't think it's too high.

I would constrain welfare spending by reforming JSA, giving lower increases to SA than SI.

Abolish many tax reliefs.

Increase VAT on unhealthy foods.
 

cremeegg

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we cannot inflate our way out of the debt
This is the important point. Everything else is just chat.

We are spending today our income in the future.

Who knows how we will live then.

To put it in perspective we are like a house hold with a €55k income and a €200k mortgage paying €6k interest only. Which is bad but not impossible but what will we do when the next recession bites. Our spending will go up our income go down and interest rates who knows.


The old argument that states are not like households has less merit today due to the absence of inflation. If it ever had any merit.
 

TheBigShort

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The old argument that states are not like households has less merit today due to the absence of inflation
State accounts are not like household accounts, it is a mistake to compare each other. A household typically has a limited lifespan in which to repay debt. A State lifespan is undefined and not set. Unlike a household, a State can borrow any number of 'mortgages' it sees fit as long lenders are willing to lend. So after first year of repayments, a State can replace old debt thst has been paid down with new debt, simply rolling over the debt.

I agree we cannot use the currency to inflate our way out of debt but there is more than one way to skin a cat.

Paying down debt now while interest rates are so low is not economically wise and certainly not politically possible.
If the government took money out of the economy now to pay down debt, this just reduces growth, cuts services, increases taxes. All that would happen is that the government would be kicked out and the next administration will simply borrow back up to levels we are at now again.

The important thing about the national debt is the interest we pay on it and the rate at which it is increasing. Currently interest rates are low and the rate at which borrowings are made is well below the economic growth of the country. This is sustainable borrowing as long as the money is spent to effective use.
 

BilliamD75

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It's not the government who produces growth, taxes are deflationary in economic terms,paying down debt when the rate is low is always the best option its very hard to pay it down when rates are higher, we have massive economic growth and are still borrowing for day to day expenditure, however you are very right the economic growth rate is greater than the interest rate thus making it easier to service at the moment, however that will change when the business cycle turns, its amazing the interest payments will be greater than the government's 2040 plan over the next two decades and nobody says anything about it
 

TheBigShort

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taxes are deflationary in economic terms,paying down debt when the rate is low is always the best option its very hard to pay it down when rates are higher,
Its this compulsive notion of paying down the debt that is peculiar. The sentiment seems to be pay down debt now while the economy is growing (meaning further pressure on public services and continuing high taxes on incomes - so who is benefiting in that type of economy?).
When economies grow, living standards should improve, otherwise what is the point?

we have massive economic growth and are still borrowing for day to day expenditur
We aren't. The current expenditure account is running at a surplus of €5.5bn. The overall budget deficit is on account of capital expenditure programs amounting to €7bn. This is critical for the sustainability of a growing economy that needs new roads, schools, houses, hospitals etc.
The small deficit is less than growth rate of the economy and the capital spend should ensure we can cope with increasing demands on capacity (if spent effectively).

We could have decided to pay down the debt by using the current account surplus of €5.5bn to the detriment of capital spending, but what would that do? It would reduce the national debt by what? 2.5%, saving €120m in interest payments?
In the meantime, vital infrastructure requirements are suspended, economic activity starts to slow, unemployment increases, future revenues begin to fall, the dysfunction in the housing market gets worse, etc...etc...The government gets voted out and a new administration goes on a spending splurge to kick start the economy borrowing amounts at higher interest rates than they could have got had they not deflated the economy.

The critical thing in all of this is that the rate of borrowing is less than the growth rate of the economy, which it is.
 

BilliamD75

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There is nothing compulsive about it, for a balanced opinion in e economic terms the government is still borrowing weather its one million or one billion, let's take capital expenditure, there are maybe 40, 50 cranes in Dublin mostly American capital projects there is a shortage of trades people and the government decide to build a children's hospital in this part of the business cycle costing more money, its like poring petrol on a fire because its a liquid, who is benefiting from all of this, well of course the over paid and bloated civil service including there golden handshakes and there pensions, take one example the justice minister wants 21000 gardai, who is going to pay for this the private sector, more deflation, it would be better if the extra recruits would work in the private sector instead, another the socialists I am in titled to it croud , the social protection budget is most likely or more than it was in 2011 and we are close to full employment,you can roll over the debt but interest rates are on the rise and its going to cost the private productive sector more money to service, yes the interest is less than the growth rate but that's going to rise, why, Q. E will stop in the next twelve months and interest rates will rise, my point is governments should not be allowed to borrow money, there are other options to finance capital projects, there was a time in the business cycle to run budget surpluses and that time has come instead of giving it away to non productive worker's In the economy
 
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