Cheer Up, it’s Good News…
Tuesday was one of those remarkable days when statistics, forecasts and news about the economy turned into a deluge. And it was all good news, except for a notable exception.
First though, to the good news.
The European Commission published its Autumn Forecasts and declared it believed the Irish economy would surge ahead by 4.6% this year. That’s more or less in line with the updated forecasts from the Government at Budget time. This is reassuring as the Commission believed back in May of this year that our economy would grow by just 1.7%. When getting forecasts spectacularly wrong turns into a good news story, you know it’s a world changed for the better.
It’s actually more accurately a ‘decoupled’ world. That’s the phrase the Commission used to describe how Ireland was benefitting from more ‘dynamic UK and US markets’ as we have decoupled ourselves from the eurozone. You see, not being in sync with the economies with which we share a currency can be good news too. And with the eurozone economy forecast to grow by a sclerotic 0.8% this year, decoupling may become the new conscious uncoupling.
But more conscious coupling arrived in the guise of suitors for Ireland’s latest bond issue. As part of the government’s strategy to replace expensive IMF loans with cheaper funds on the bond market, it successfully raised €3.75bn in a fifteen year bond at a yield of 2.48%. The National Treasury Management Agency, which acts on our behalf in these transactions, actually got offers of over twice that amount. So now we have people queuing up to loan us money at very reasonable rates, which will have the net effect of us repaying less in interest repayments. Okay, so we still owe huge amounts of debt but it can’t be all good news.
But there’s more.
October’s Exchequer figures came in late yesterday afternoon and, once again, tax revenues are ahead of where they were expected to be at this stage of the year to the tune of just over €1billion. All of the main tax sources were ahead of profile. And it’s clear from increased VAT, excise duties and stamp duties that there’s a lot now going on in the domestic economy that’s boosting economic activity. So, three cheers for being taxed more.
But finally to the not-so-good-news.
Buried beneath the blizzard of boominess, the monthly KBC Bank Ireland/ESRI Consumer Sentiment Index for October produced a peculiar result.
It found ‘a surprising and substantial decline in October’ in consumer confidence. In fact, so surprising and substantial, that the authors of the Index speculate that it could be down to ‘a statistical blip’.
Of course, it could be the now familiar gap in perception between what people hear about the economy and what they feel (or don’t feel) in their pockets. Or maybe it’s the onset of winter. Or maybe it’s something in the water.
Robert Short - @RobertShortt