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Reality can't be hidden behind rhetoric anymore

Posted by jj on August 02, 2011 at 15:15:23:

Having been in Ireland a bit over the month of July, I am amazed at how much mis-information that is currently out there.

Attached is a good summary article from Sunday Business Post, and I will highlight one particular passage.

is is the balance between spending and revenue, before counting in national debt interest payments. At the end of this year, this primary balance is expected to be 15 billion in the red - in other words, we are spending 15 billion more than we take in through taxes to run the country.

Or for every 5, we are spending on running the country, we are only getting around 3.50 in taxes and other revenues.

It is sobering to realise that the 15 billion gap has nothing to do with the direct cost of recapitalising the banks. It is purely a measure of how the collapse in tax revenue has left a gaping hole in the middle of the exchequer finances. Now, you could argue - with some justification - that the collapse of the banks has been an important factor in the overall hit to the economy.

However, the hole in the middle of the exchequer finances is there.

This is why, despite the goodies from Brussels and the few bob saved from the Bank of Ireland, the government will still have to find 3.6 billion in higher taxes and lower spending on budget day.

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