“Shoppers” worry over 2013 Budget cuts? And what about 2014, and 2015… and… October 23, 2012
Posted by WorldbyStorm in Economy, Irish Politics.trackback
A few snippets of news that have come together point up the sheer unreality of much of the economic discourse we are currently presented with. In the Irish Times one will read that employers group IBEC has ‘downgraded’ its growth forecast.
…it now expected Irish GDP to grow 0.8 per cent this year, compared to an earlier forecast of 1 per cent.
In its latest Quarterly Economic Outlook, Ibec also revised its growth prediction for 2013 from 2.3 per cent to 1.8 per cent.
The business lobby group said the downward revisions were the result of faltering economic growth in the rest of Europe and heightened consumer worries at home.
Meanwhile Retail Excellence Ireland was quoted in the Sunday Business Post as offering research that shows:
Speculation about the extent of cuts in the forthcoming budget dented shopper confidence over the last quarter… While retail sales during early summer were neck and neck with last year, they fell steadily in July and August.
And on a slight tangent for those of us who find much of the noise about a stabilising property market to be completely for the birds….
The fortunes of individual sectors varied considerably, with ‘brown goods’, such as televisions, getting a boost from the digital switchover, resulting in growth of 16 per cent. However, the bad weather meant that ladies’ fashions and gardening sales fell.
In addition, anything linked to the property market continued to slide, while IT and computing were down almost 20 per cent as prices fell, leading to lower revenues.
And:
REI chief executive David Fitzsimons described the figures as disappointing. “The third quarter of the year gradually disimproved, primarily due to Budget 2013 speculation, indicating that a return to growth is now less likely than first thought,” he said.
Well, yes. Falling retail sales would be one of a number of indicators pointing to the reality that growth was unlikely.
But why would all this be? One turns to a third report from the Irish Times which notes that:
THE STATE of Irish consumers’ finances continues to worsen with half of all adults now saying they struggle to pay bills on time, research published by the Irish League of Credit Unions (ILCU) this morning indicates.
Its third What’s Left tracker survey of the year found 1.85 million adults have less than €25 a week to spend after essential bills are paid. This compares with a figure of 1.82 million in July and 1.64 million in April. Since the last survey, there has been an increase of 28,000 in the number of adults with nothing left at all after essential bills are paid.
Amazing, isn’t it? Many more people have much less money to spend than they did and the knock on effects are obvious.
Now IBEC wants the government to butt out of imposing costs on business. Not for them statutory sick pay schemes or increases in PRSI – and they’re adamant that government expenditure must be cut while revenue must not be ‘raised in a way that is damaging to growth’. But it also, and simultaneously, wants the following:
“Austerity alone is not the answer, we need Government to deliver the conditions for economic growth. We need an ambitious growth strategy that supports investment, addresses the weakness in the domestic economy and rebuilds confidence.”
They’re right in that respect. But I await with interest their thoughts on how such a strategy for growth could be funded given they themselves have been part of a chorus of voices calling, as they do now, for reduced taxation and deflationary measures. In other words for the removal from the state of the very economic levers that would permit the state to assist in some form of economic support. Quite some circle they’re having to square there.
And as for the rest? Citizens, as distinct from consumers or ‘shoppers’, are right to be concerned about Budget 2013, but they would be wise to keep an eye on Budget 2014 and Budget 2015 and after and ask themselves just how matters will stand after three, and perhaps more, exercises in deflationary policy.
I actually sell things for a living, as opposed to being an economist or economic commentator who merely writes about what’s in the interests of people who sell things for a living. And amazingly enough, I find that when people are losing their jobs, or their spouses are losing their jobs, or when they’re worried they may lose thieir jobs, or when their pay is being cut, they do not buy as many of the things I sell as they used to. Yes, who’d have thought it.
I suspect however that most of the aforesaid economists and economic commentators are not presently losing their jobs, nor are their spouses, and nor are they worried they may do so. And they’re spenind just as much as ever thye did. So they know that what I really need is for government to cut the costs on business. As it happens this means cutting the pay and abolishing the jobs of my customers, but at least I should have fewer forms to fill in at the end of the day.
Under the IMF/EU/F.G/Labour economic policy 5 or 6 percent of GNP is being transferred annually out of the economy to international capital. This requires that domestic living standards be correspondingly reduced. Looking for sustainable growth prospects in such a context is b.s.
+1 It’s impossible.
ejh, your explanation is as good as any I’ve heard for the complete disconnect on this matter…
In the IT business section today there was a comment piece about Obama and his economic policies. It focused on the election and Romney’s criticism and came down firmly on the side of Obama, based essentially on growth figures.
But is there any article looking at Irish or European policy in a similar way? Obviously not. Bizarrely, despite all the evidence that the current plan is failing, it is not at all subject to criticism, beyond everybody saying that everybody else should be the ones who suffer.
We are now seeing nothing beyond a slavish following of ideology long after that ideology has not only failed but has been seen to fail.