Ireland is facing severe economic dislocation. This isn't the place to talk about what happened, the link tells you more about what’s happening in Ireland, I quote:
- Ireland became the first eurozone economy technically in recession in September after two quarters of negative growth.
- That month, with concerns mounting about the health of the country’s banks, the government ignored the complaints of other EU member states and guaranteed the entire €440bn liabilities of its six domestic financial institutions.
- In late December, Mr Lenihan returned to the banking crisis, announcing a €5.5bn recapitalisation, including – controversially – €1.5bn for Anglo Irish Bank
- International investors have also given Ireland poor marks. Today only Greece in the 16-member eurozone is considered a worse credit risk and pays more to borrow in international debt markets. Last week, Standard & Poor’s downgraded Ireland’s debt outlook from stable to negative and warned it might cut its sovereign debt rating.
- The general government deficit is now forecast to be 9.5 per cent of gross domestic product in 2009 – and that assumes €2bn in savings from planned reforms. Without these savings, the government calculates the deficit will hit 10.5 per cent this year and remain in the 11 to 12 per cent range through to 2013.
- The increased government borrowing needed to finance such deficits could see Ireland’s debt-to-GDP ratio jump from 24.7 per cent in 2007 to more than 80 per cent. Such an increase in public debt would not just entail much higher debt service costs but could damage investor perceptions of Ireland.
But more importantly, what Ireland is doing to the public sector is what is quite interesting. Now that’s something that the public sector workers in places like the UK and other places in Europe are shuddering to read. Let me quote from this site:
- Mr Cowen forced in a new pension levy for 350,000 public sector workers and froze their pay. The average public sector worker, on €45,000 a year, will now pay €62.50 a week into their pension fund.
- Ministers took away the early childcare allowance from the parents of some 30,000 children. Payment of the allowance for the remaining 350,000 children will now be cut off once the child turns five, and the amount handed out will be cut from €1,100 to €1,000 a year.
- Adjustments to the National Development Plan
- A cut in the overseas aid budget.
- Mr Cowen is also deferring pay rises due under the national pay deal.
Can you imagine? actually trying to reduce or free public sector pay? Scary stuff.., but I suppose we have to do the same thing over this side of the Irish Sea. This is what they are trying to do in Scotland:
But the leader of the Scottish National party told journalists that efficiency savings of the order demanded by Westminster in 2010/11 and again the following year would lead to 8,700 job cuts across the public and private sector.
Quite interesting days ahead…