The average interest rate paid on our debt in 2010 is 4.3%. The public sector debt costs every employed person in the country €1,000 next year in interest payments alone. The banks in Ireland have €375 billion lent to Irish private sector more than half of which is in property mortgages or in property related dealings.

Currently, the government intends borrowing €20 billion in 2010. Social welfare has NOT been cut at national level – it is increased by €700 million over last year.

In 2009 – day to day spending is €56 billion after the multiple budgets.
In 2014 – day to day spending is intended to be €54.6 billion

We currently have a national debt of €56 billion going north and NAMA intends adding €54 billion before a gradual clearance is effected (hoping). Start your 4.3% calculation and remember the uproar about this year’s €1.3 billion cut in the budget and you will get the message.

By 2014 – The cost of servicing the national debt will rise to about €7 billion per year.

This means that public sector pay will remain frozen or cut and public sector numbers will fall. It also means that public sector pension costs will be held down no matter what.

So taxes will also rise – domestic property taxes and water charges are certain and the cost of oil and gas will rise.

We have to hope that external trading partners get back to business quickly as we depend on foreign trade.

Meanwhile we must get the cost of living down in the republic. Foreign traders profiteering from the 25% sterling devaluation should be targeted to lower euro prices here. Also state charges must be lowered – rates, electricity, gas, employment taxes.

2010

Tax – 90% of non-corporation tax revenue comes from 37% of households.
The top 4% will pay 55% of the total income tax.
The budget forecasts a reduction in the structural deficit to €10 to €12 billion.

The EU Stability and Growth pact requires this to be 3% of GDP by 2015.

However, Department of Finance forecasts have been 97% wrong on expenditure and 60% wrong on revenue predictions for 2009 – bad record.

Department of Finance will drive another €3 billion cut in 2011 and a further €5 billion cut up to 2014 to get to a 3% budget deficit assuming a contraction of 0.8% in GDP in 2010 and an annual economic growth rate of 4% up to and including 2014. Factor in the interest charges on the national debt and NAMA and I do not believe the forecast is credible.

MORE CUTS and TAXES in store

Post NAMA, the six biggest banks will need about €9.7 to €12.4 billion in capital investments which will lead to effective nationalisation of AIB and EBS/Irish Nationwide (€4.2 billion for I Nationwide!!!!) . If half of this occurs in 2010, our budget deficit will head out towards 14.5% of GDP.

—— Another budget this year then – increases in taxes and further cuts ——-.

As of December 2009, Greece, Ireland, Spain, US and the British state all have government deficits of 12% of GDP. That will keep bond interest rates higher and will increase our repayments immediately. In 2010, consumption will fall by 3% and investment by 19%. Unemployment will be about 13.5%.

Conclusion – Bill is very depressed about old Ireland