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Jan 5: Cutbacks having desired effect | Print |  Email
Thursday, 05 January 2012

Given the times that are in it, Exchequer returns for 2011 are being viewed positively although we ended the year with a deficit of almost €25bn. Tax income of €34bn was €2.3bn up on the previous year but fell far short of current expenditure of €48m. A €13.7m deficit on the capital account combined with some other pluses and minuses resulted in an overall deficit of €24.9bn.

Probably the key point from the returns was whether the bottom line met the criteria agreed with the Troika of the EU, ECB and IMF. It did in so far as the budget deficit for 2011 will be around 9.8% of gross domestic product, comfortably below the target of 10.1%. That has to be brought down to 8.6% in the current year and the feeling is that we can also achieve this goal.

Although tax revenue was up on the previous year, it fell short of the budget forecast by €873m. The growth over 2010 was primarily accounted for by the Universal Social Charge, introduced by the last Government, and the levy on private pension funds imposed by the current Government.

Most of the tax shortfall was accounted for by VAT, which was almost €500m short of the budget target, and Income Tax, short by €327m. Stamp duty revenue, on the other hand, was up €436m or almost 46%.

In fact the shortfall was less than reported as some €261m of December's corporation tax receipts were not received into the Exchequer account in time to be accounted for in 2011. This will give the January figures a nice boost.

If €7.6bn in bank recapitalisation costs are excluded from the expenditure total, the underlying deficit is €2.75bn lower than at the end of 2010, suggesting that the Government's cost saving measures are beginning to have the desired effect.

Live Register makes cautious move in right direction

The number of people signing on the Live Register increased by 5,217 over the month of December. Seasonally adjusted, however, there was a decline of 3,300 in the number out of work at the end of the month, and this is the important figure.

At 434,784, the number signing on the Live Register at year end was 2,295 lower than at the end of 2010. The standardised unemployment rate now stands at 14.3%, down from 14.4% in November and from 14.7% in December 2010.

Senior HSE executive to take up World Bank role

Seán McGrath is to leave his post at the Health Service Executive, where he is national director of human resources, to become vice president of human resources at the World Bank in Washington. He has been in his current role since 2008 and will leave in around three months' time.

AIB cuts ties with Aviva

AIB is ending its relationship with Aviva under which the bank's life assurance and pensions business is managed by the international insurance giant. AIB provided Aviva with a very significant part of its Irish business and it is not known how the decision will affect AIB's life and pensions clients, or Aviva's Irish business model. A spokesperson for AIB did say that Aviva staff involved in AIB business will transfer to AIB.

Minister to be invited to Belfast for Somme commemoration

Much is being made today of the fact that the Dublin Government is to be invited to send a minister to the Battle of the Somme Centenary commemorations at Belfast City Hall. SDLP councillor Pat McCarthy proposed that the invitation be sent and this was agreed by unionist councillors; Sinn Féin abstained.

It's not clear why invitations are being considered at this stage as the centenary is still 4.5 years away.

Today's Papers

Both the Irish Times and the Irish Independent focus on tax issues this morning, with "Tax shortfall will not affect budget targets, says Noonan" and "The great tax grab leaves you €1,400 worse off" respectively. The Irish Examiner looks at the numbers applying to leave public sector jobs before the end of February deadline, with "7,000 public workers apply to retire".

The Irish News headline reads "McDonnell in trouble over call to raise MLA's pay".

The Weather in Galway

The strong winds have finally dropped though it is still damp. Temperature 7C.

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