We have a clear plan to guide the Economy to better times. |
We exited the EU/IMF bailout as planned, without needing a new precautionary credit line. |
Now, our medium term economic plan has two connected targets:1. To reduce the Government deficit to under 3% of GDP by 2015 and to eliminate it by 2018
2. To replace all 330,000 jobs lost during the recession with new jobs by 2020. |
These aims are based on 3 pillars: continued responsible management of the public finances, banking reform and creating more jobs. |
The Economy has Stabilised |
The economy has returned to growth, with 3.4% GNP growth in 2013 & 1.8% in 2012. This compares well to the euro area where GDP fell by 0.4% in 2013. |
Real GDP growth was 2.2% in 2011 but flat over 2012-2013 due to the pharma patent cliff. GDP measures the output of a region; GNP measures the income of residents in a region. |
Employment is Increasing |
Employment increased by 61,000 jobs in 2013. Ireland has the highest annual employment growth in both the EU and the OECD. |
Private sector jobs are increasing by over 1,200 per week. This contrasts with 1,600 private sector jobs lost per week in the 3 years before this government took office. |
The unemployment rate is down to 11.8%, the lowest in 5 years, from a peak of 15.1% in Feb 2012. The number on the Live Register is below 400,000 for the first time since 2009. |
IDA has had three record years, with over 20,000 net new jobs in supported companies since the Government was formed. New jobs were created in companies like PayPal, Sky & Apple. |
Enterprise Ireland reports over 6,000 net new jobs since the Government was formed. |
International Confidence has Returned |
In March 2014, the NTMA raised €1bn in their first bond auction since September 2010 at a historically low rate of 2.967% for our 10 year benchmark bond. The compares to 15% yields in July 2011, showing the renewed strength of Ireland’s international reputation. |
The Irish State is now rated at investment grade by all three rating agencies. |
In January 2014 the NTMA sold €3.75bn of bonds maturing in March 2024, showing that Ireland has fully exited the EU–IMF bailout. |
Budget / Fiscal Policy |
Our 2013 exchequer deficit of €11.5bn is an improvement of €3.4bn on the 2012 deficit of €14.9bn. We are confident that the 7.5% of GDP target for general govt. deficit will be met. |
Exchequer returns are on target for Q1 of 2014, with income tax & VAT receipts up 3.5% & 6.4% respectively reflecting the improvements in the domestic economy. |
Budget 2014 was a fair budget:
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Public Sector Reform Policy |
Public service numbers have been reduced by more than 30,000 (almost 10%) from a peak of 320,000 in 2008, to less than 290,000 in 2014. |
The Exchequer pay bill has decreased by €3bn from €17.5bn in 2009 to €14.1bn in 2013 (net of Pensions Related Deduction). Haddington Road will save a further €1 billion by 2016. |
Policy on Debt & Europe |
The Government achieved greater than expected savings of circa €9bn from reduced interest rates on funding from the troika, in Summer 2011. |
The Eurogroup agreed a framework for the ESM to recapitalise European banks (June 2013) including “potential retroactive application … on a case-by-case basis and by mutual agreement.” The joint Communiqué from the Taoiseach and Chancellor Merkel (21st Oct 2012) states that “Ireland is a special case” with “unique circumstances.” |
In June 2013, the extension to the maturities of our EFSF & EFSM loans was formally agreed. The changes will reduce our market refinancing requirement by €20bn from 2015-2022. |
Banking Policy |
The cost of bank recapitalizations was limited from an initial €35bn (troika programme) to €16.5bn, through junior bondholder burden-sharing and securing private capital investment. |
The State has generated €1.8bn by selling preference shares in Bank of Ireland (Dec 2013). |
Anglo Irish Bank and Irish Nationwide Building Society (IBRC) have been closed down. |
The promissory notes were exchanged for long-term government bonds, reducing Ireland’s borrowing need by €20 billion over the next 10 years. |
NAMA has met its key target of redeeming €7.5 billion of Senior Bonds by the end of 2013. |
Irish banks can access private markets: both Bank of Ireland and AIB raised €500m in 3 Year senior unsecured funding (in May and November 2013 respectively). |
Access to credit for SMEs has increased: €850m of National Pension Reserve Fund for SMEs; €700m seed & venture capital; €450m credit guarantee; and €225m in development capital. |
Mortgage Arrears Policy |
The number of primary home mortgage accounts in arrears decreased by 3% in Q4 2013. |
54,000 mortgages were permanently restructured by Jan 2014; a 19% increase on Q3 2013. |
The CBI will consider regulatory action (e.g. additional capital requirements) if necessary |
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Jobs Policy |
NewERA provides €6.4 billion for a stimulus in the economy, using the National Pensions Reserve Fund’s remaining ‘discretionary’ funds (the Fund excluding the stakes in the banks). |
Budget 2014 contained a €500m jobs package of 25 measures: retention of 9% VAT rate; reduction of air travel tax to 0%; home renovation incentive; CGT relief for reinvestment of previous asset disposals; ‘start your own business’ exemption from income tax. |
The 2014 ‘Action Plan for Jobs’ contains 385 job creation measures, building on the more than 500 measures already implemented through APJ 2012 and 2013. These include 3 new high-impact ‘Disruptive Reforms’ in entrepreneurship, FDI and manufacturing. |
Improved our competitiveness — “best place in the world to do business”, Forbes Magazine |
Under the JobsPlus scheme, launched in July 2013, the State will pay €1 of every €4 of the employer’s costs, when they recruit someone who is long-term unemployed (over 12 mths). |