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.
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.
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?
The Irish government,through the National Treasury Management Agency (NTMA) this week closed the successful sale of a 5 year Government bond,securing €6bn at a rate of 4.07%. The sale was oversubscribed, with orders in excess of €7bn. The buyers comprised of asset fund managers and central bankers. It is expected that the Government may have to borrow at least €20bn on the bond market this year. The rate to be paid is higher than most countries (Germany 2.35%, Italy 3.57%) but lower than Greece (4.76%) for their latest 5 year bonds.
The agency were attempting a sale €3bn, but with 140 investors willing to buy,decided to double their target.
Irelands debt to GDP ratio now stands at 41%