Country Report Ireland November 2009

Summary

The economy will suffer depression-type conditions during 2009-10, because of the collapse in the construction sector and depressed private consumption.
The Economist Intelligence Unit's central forecast is that the coalition government will remain in office, but the risk of a premature election (that is, before 2012) is considerable.
The budget deficit is forecast to average 13% in 2009-11. The risk of default (or a bailout to prevent this) is small, but real.
The Irish banking system is in a precarious state, despite liability guarantees and public recapitalisation. In September the government confirmed that it would buy non-performing loans with a book value of €77bn.
On October 2nd Irish voters endorsed the EU's Lisbon treaty in a referendum, which provides for changes to the bloc's institutions and structures. The result will remove uncertainty about Ireland's position in the bloc.
Economic growth is expected to contract for the third consecutive year in 2010, before a slow and gradual recovery takes hold.

Politics is increasingly being dominated by how the government will frame its 2010 budget, which is to be outlined in early December.
Most contentious at present is the government's announcement that it plans to cut the public-sector pay bill by 6.9% in 2010 from its 2009 level. In response, the Irish Congress of Trade Unions has called nationwide protests.
The speaker of the lower house, John O'Donoghue, who is a member of the dominant coalition party, Fianna Fail, has been forced from office, owing to revelations about his extravagant expenses claims.
Large tax increases in late 2008 and during 2009 have not stabilised the budget deficit, which is expected to be the largest in the euro area in 2009. Very significant cuts in public expenditure are now unavoidable.
In mid-October Eurostat, the EU's statistics agency, accepted the Irish government's position that its purchases of banks' impaired assets will not be added to the general government debt total.
Ireland, alone among the 27 EU member states, recorded growth in export sales in January-July. However, the level of new orders in manufacturing suggests that Ireland will soon suffer a sharp fall in exports.
On a seasonally adjusted basis, new orders fell by 25.3% between April and August, according to national data. European Commission figures show an even larger decline—of 32.8%—in the same period.

This report covers the following industry codes:
SIC Code: 39
NAICS Code: 31