The state of Ireland's economy

[Hassled]

Scary article in the Guardian today here.

It says "Ireland's government has slashed public sector spending by 7.5% of gross domestic product with a series of drastic cuts this year: public sector pay by 15%, child benefit by 10%, unemployment benefit by 4.1%. Another ?3bn will be removed next year, a total of 10% of GDP over three years: these measures are equivalent to the British government slashing its budget not by the £6.25bn planned by George Osborne in 2010, but by an incomprehensibly gigantic £150bn."

I knew things were bad (spent a big chunk of my childhood in Dublin, have a lot of family there) but I hadn't realised how bad. And while everyone seems to agree that the blame lies with the banks, corruption and developers, there doesn't seem to be the anger that you'd get in other countries - in the UK even. Why?

starmucks, its not just negative equity, its also the huge amounts of personal debt people are sitting on. People were living high on the hog and spending like the good times were going to roll forever. People felt like they had earned the fancy house, two cars and three holidays a year because they could see their house value was going through the roof. Sadly most people didn't realise this wasn't real money, but they spent it anyway, either by taking so called equity release, or credit cards or credit union loans. When we went to see a mortgage advisor in 2006 we had a small debt as well as a deposit (stupid I know). We were told to hide the debt in the credit union then when we bought we could remortgage in six months and the house price increase would easily cover the debt! Thank christ we decided to pay off the debt first instead and not take on what would have been instant negative equity, but many many people drank the koolaid.

Sorry to hijack I was going to post in money but as there seem to be a few Irish Mums here I thought I would ask ye. I have just moved back to Irl and am looking to open a bank acc I want a savings and a laser[current acc] no over draft. But the prob is I earn less then Euro 30,000 so BOI, AIB and TSB have said no to the laser/debi tcard I own my own house, have no loans or debts and no visa and will be transferring my life savings which is an ok amount any clue where I should go to next DP will be moving over next month and will need an acc also he will be earning more then the Euro 30,000 so bet they all want his business
Thanks and sorry again hasseled for the hijack

Buzzybb, you could try Ulster Bank. I'm really surprised that you were turned down for that!

That sounds like complete bollocks - pardon my french. My little sister earns less than 30k and has an AIB account. You are totally risk free so no idea why they wouldn't want your business. Have you told them that you'd be transferring your savings too? Could be because you have no credit history there, but still sounds really short sighted and stupid.

I think the Irish have historically been savers rather than spenders, mainly due to most of the population coming from farms, where life was always dicey, and I think the general wisdom, expressed in the form of self-flagellation about greed, reflects the farm mindset that foolish spending will land you in trouble.

In the 70s and 80s Ireland's personal income tax rates were astronomically high, for all but the poorest and lowest earners, and yet this was accepted, albeit with a fair bit of grumbling. Charlie Haughey's budgets while he was Minister for Finance were usually fairly draconian. There was a strong element of all pulling together for the sake of the future, and so, while foreign multinationals paid little or no tax on profits, the employees paid through the nose to allow those industries to be attracted to Ireland in the first place. Irish people also saw the development of access to third level education during those decades as a really worthwhile investment, and were prepared to make the sacrifices that were involved to allow the sort of investment that that entailed.

I think there's more of a sense of all being in it together in Ireland than you find anywhere else, and that helps. There's moaning about corruption, offset by a certain amount of admiration for the cute hoor; there's complaining about people cheating on benefits, offset by compassion of the 'there but for the grace of god..' variety.

And above all, there's a realisation that there's really only one party capable of forming a government, as well as a voting system that allows you to express your opinion in great detail (proportional representation) at every election. You can vote for almost every candidate in your constituency, in order of your choice, all over the political spectrum.

Starmucks - I am the same as you. I left ten+ years ago to move to London and every trip home made me want to move back less and less. I never moved back.

Where my family live there are a lot of Dubliners (and others) with second homes. Now the shells of their half-built bungalows line the road (something I have never, ever understood about Ireland- you have a gorgeous view behind you, but you ignore that and build your house facing the road). My brother and I always spent a lot of time wondering how the hell people could afford the jeeps, mercs, 'beemers', speed boats etc - even people that we knew earned less than we did.

There was an interesting segment on You and Yours on Radio 4 the other day about this here in the final half an hour - three Irish people - an economist from a university, a business leader, and a union representative all discussing the attitude in Ireland. Winifrid Robinson said her blood ran cold listening to them describe the cuts being made, but the three (men) were all pretty pragmatic about it.

Isn't there a competition running in Ireland at the moment to try and get the public involved in coming up with ideas to help the economy recover?

I look forward to listening to that flying cloud. It's funny, I used to wonder what kind of salary you'd need to earn before a Louis Vuitton or Chanel bag were affordable. Turns out it was about €40k.

Mathanxiety - I have never meet a poor farmer, and I am from the country. They may plead poverty publicly, but they're the sharpest accountants and financial planners around.

Yes they are -- fingers always in the wind.

The Irish situation is interesting - badly hit by the collapse in property companies and financial services

Currently working on a refinancing of a property group and was astonished to discover what a huge proportion of property groups are close to insolvency, here in the UK as well.

Tks Glastocats I had only gone to the major banks not tried the others yet, will ring Ulster bank on Monday.
Starmucks it is because I am to old to open a starter acc but do not have enough earnings for a current acc I was esp as I had a huge check to deposit into a current acc, even more that TSB would give me a savings acc and a visa ice acc but not a laser acc,
Might just have to hide my money under the matress

Interesting thread and agree with so much that has been said - am also Irish but one of the last wave if emigrants twenty odd years ago. For years I have been saying that so many people there were going mad, living beyond their means. Felt slightly sickened by all the materialism there tbh. I think it changed the charecter of the country. Am so glad now I didn't move back...

I feel that in a lot of ways the consumer spending was fuelled by feelings of insecurity - even well-off people I know in the UK don't seem to feel the need to flaunt it by having designer this & that, wearing labels seems slightly tacky iyswim...

I also think the benefits system there is far more generous than the UK - whoever told us what their Child Benefit is - that is still double what you would get in the UK. When I was last home there was a woman on the Late Late moaning that her dole was going to be means tested now that she has been off work for a year - in the UK it is means-tested right from the start and you would only get the few quid JSA if you have much in the way of savings...

Yes the benefits sytem is much more generous in the UK. I get €150 per month child benefit. You get €196 per week dole for a year non means tested. Although living expenses here are very high.

The children's allowance was introduced in Ireland originally because it was recognised that many fathers were drinking the bulk of their wages and women and children were going hungry, barefoot, etc. It was designed to allow women to keep their families from starving.

I suspect that a lot of these things even out in the end. Children's allowance may be higher but you have to pay for your doctor's appointments at perhaps 50 euro a pop so it would be very easy to use up any extra money very easily if your child is ill.

I'm not sure about this one because I left Ireland long before I had children but I suspect you don't get any free nursery sessions for 3 yr olds either? Can someone confirm that?

I think the reason the children's allowance is so high is that we don't get any tax allowance for children whereas in the past there was a system of tax deductions per child. Maybe something like the tax credits in the UK but I am sure.

It is true about the doctors annh It can be very expensive. My dd1 has asthma. We attend the GP regularly at a cost of 45 euro a pop. She is on a medication that costs 60euro per month as well as inhalers and anti-histamines. There is a scheme that gives relief if your prescriptions are more than 120euro per month per family but unfortunately we don't qualify as we never quite spend that per month.

They have introduced the free pre-school place system from this year.