Tanaiste Grasping at Flimsy Straws

17 Dec 2009

Reacting to the attempt by Tánaiste Mary Coughlan to put a positive spin on today's National Income figures, Paul Sweeney the Economic Advisor to Congress, said that the deflationary impact of Budget 2010 means the economy will continue to decline in 2010."

Mr Sweeney said: "Ms Coughlan seems to take comfort from the decline in Q3 over Q1 & Q2 figures and the fact that GDP showed a small increase in the quarter. One quarter is no indicator and 'short-termism' is at a root cause of this recession. The Minister is grasping at flimsy straws.

"With a fall in National Income in the year to September of a massive 11.3 percent in GDP, there is only ice-cold comfort in hoping that because it is fractionally less than the decline of over 12 percent in the previous two quarters, the recession may be bottoming out. As Q4 includes Christmas, the next Quarter also be below the 12 percent decline, but the impact of the savage Budget will depress domestic consumption further, deep into 2010."

Mr Sweeney said it is wrong to take GDP as the marker simply because it was more favourable than GNP, as GNP is what is commonly used in Ireland. The collapse in Irish GDP was a still huge fall of 7.4 percent, compared to the even bigger fall of 11.3 percent in GNP for year to Q3, 2009, he said.

"Ireland's economic collapse in GDP was almost the worst in the world in 2009. After Budget 2010, Ireland will again be a leader of the laggards. And unemployment will rise in 2010, greatly assisted by the deflationary Budget," he concluded.