The Irish economy is heavily reliant on exports as a key for creating economic growth. Consumption,Investment and Government spending remains flat therefore the reliance on exports.
While the mutinational companies located here tend to export their output indigenious companies are seeking new opportunities abroad. The relentless growth in the global demand for food for example provides an opportunity for Irish business.
Increasingly the Government are looking beyond the EU and to that end have organised trade missions to parts of the world we have not traded with in the past. This has seen visits to the BRIC countries -Brazil,Russia,India and China. Such visits are bearing fruit. Exports to China for example have increased by 40% in the past year with potential for further growth. Indeed China has become our sixth leading destination for our exports.There are extra challenges involved in terms of distance,technical,language and culture.
At present the Taoiseach,the Minister for Employment and a number of Irish business’s are involved in a trade mission to the Gulf region including Saudi Arabia,United Arab Emirates and Quatar.
The Irish Government are presently examining bids for An Bord Gais. Favourite to be successful is a bid from Veridian, a Northern Irish power company.
It is believed that an Bord Gais could be split up into a number of separate companies after privitisation to take account of its wind farm assets, pipeline development as well as retail gas supply business.
The privitisation was agreed between the Government and troika in 2010.
The gradual strengthening of the € against the £ will see the price of our goods becoming more expensive in the U.K. thus problems for our exporters. At the moment €1 will get you £0.87 but there is speculation that parity is a possibility. Exports to Britain are worth €15 bn a year. Indigenious Irish business is heavily dependent on the U.K. so they will be hard hit by such an event.
Irish Government spending in 2011 was €64bn while income came in at almost €39 bn.
Thus we had a deficit of €25bn. This will certainly mean further cuts in expenditure and increases in taxes.
Meanwhile take a look at our national debt clock-however be warned you might start to feel unwell!
Iceland held its referendum on its €3.9bn repayment package to UK and Dutch savers on Saturday last.Icelandic banks collapsed in both countries leaving savers at a loss. Icelanders are seething at the actions of the authorities in those countries. A final turnout of 62.7% cast their vote with 93% rejecting the proposed repayment package.
It looks like the Icelanders do not want to renege on the package but they want the terms of the repayment to be re-negotiated.
A €4.6bn IMF package for the Icelandic economy is on hold until there is certainty about how the foreign savers are to be compensated.
The President of Iceland has moved against Icelandic parliament in refusing a deal that would see the repayment of €3.9bn to UK and Dutch savers in a failed Icelandic bank. This is creating diplomatic tension between the countries involved. President Olafur Ragnar Grimmson was reacting to a petition signed by thousands of Icelanders to refuse payment. The presidents move was a blow to Prime Minister Joanna Sigurdardottir’s government who backed the deal.
The matter will be decided by referendum on February 20th.
Ireland recorded a Balance of Trade surplus for 2008 of €29bn. This is a 14% increase on the previous year.
Exports fell by 3% while imports fell 10% (led by a collapse in the sales of cars and computers).
Insurance magnate, Sean Quinn has been knocked back from first to third place in the list of Ireland’s richest people to be replaced by Denis O’Brien, according to latest Rich List from Forbes Magazine.
Forbes estimates that the Quinn family fortune plummeted by some USD4.5 billion in the past 12 months with Mr Quinn losing at least E1.5 billion from his Anglo Irish investments.
Media mogul Anthony O’Reilly has dropped out of the billionaires’ list this year.
Overall, the world’s billionaires are estimated to have lost about one-quarter of their combined wealth last year.
Bill Gates regained his position as the richest person in the world, overtaking investor Warren Buffett, whose personal fortune fell by USD25 billion.
As the gobal recession bites hard,their is growing suspicion that many governments are edging towards protectionism. The Czech government in its EU presidency is determined to uphold unity and ensure that member states obey the rules of the single market. The G7 states also have pledged to work together in tackling the global crises.
Meanwhile,France’s plan to inject €6.5bn into its car industry (Renault/Peugot/Citroen) has angered the German,Swedish and the Czech Republic governments. Hot on its heels is aid for the Spanish and Italian car makers from their authorities.
President Obama meanwhile has a “Buy American“provision in the stimulus package leaving little doubt as to where his sentiments lie. The U.S has been criticized by Europe,Japan and Australia. The Chinese have also been critical without naming the U.S.
When announcing its 4 trillion yuan stimulus ($586bn) it avoided a “buy local” message.
The Society of the Irish Motor Industry , the Trade Association representing garages nationwide have reported that January new car sales clocked in at 15,929. This is a 67% decline from January 2008 figures(47,609). This is the most up to date snapshot of the state of the Irish Economy. It indicates the unwillingness of people to update their motors. It has an immediate negative impact on exchequer returns,and will cause unemployment in the garages. The weakness of sterling as against the Euro has seen many people travel north or across the Irish sea to pick up a bargain.
Will the Government introduce a testing system (a la NCT) for all foreign imported cars?
What chance of a re-introduction of a Government backed “scrappage” on old cars?