By far the most incisive commentary on the financial crisis in Ireland was delivered recently by John Bruton whose basic point was that:
(1) The Anglo bail-out while massive and a real financial drag is finite and will eventually crystallize out at a figure – estimated by S&P previously to be around €35bn
(2) The ongoing current spending deficit in the goverment’s finances (of the order of €17-€18bn) is a much bigger issue as it will lead to an infinitely rising national debt if not addressed quickly.
This is borne out by some pretty frightening stats provided by the Minister for Finance to the Dáil in June:
- Tax revenue in 2010 likely to be €31bn, down 35% from the 2007 peak
- By contrast, current expenditure will have risen by 65% from 2003 to 2010
- National debt was €38bn at end 2007
- National debt estimated to be €75bn at end 2009
- National debt estimated to be €94bn by end 2010
Long-range forecasts seem to put the national debt at €150bn by 2014.
So if you consider the national debt to be our national “mortgage”, we will have quadrupled our national mortgage by 2014 with absolutely nothing to show for it.
An appalling vista indeed.