Let's take a look at the year on year performance across all departments (2 charts below):
Looks like all departments are performing well in cutting back spending, save for Social Welfare and the department of Communications, Energy and Natural Resources. However, even a cursory glance suggests that something is amiss. In particular, it is pretty clear that the cuts are primarily happening on the capital side.What the above charts do not tell us is that there is an interesting dynamic structure emerging to the cuts. This is highlighted in the next chart:
Notice the following in the chart above:- Capital spending cuts overall have clearly dominated current spending cuts - for example, in August the ratio of capital spending cuts to current spending cuts stood at -34% for the former and -1.6% for the latter;
- Capital spending cuts are finally starting to decline in magnitude, having peaked in June at 36% and having declined to -34% in August. It looks like the state is finally beginning to spend - though still anemically - on the few capital projects it promised to deliver this year.
- Current spending cuts became shallower and shallower as the year progressed. In January 2010 current spending was 11.9% below the same period of 2009. In 5 months to May it fell to -5% compared to 5 months to May 2009. In August it is down only 1.6% on the same period of 2009.
So far we are down 5.8% on 2009. But this is not exactly a massive achievement, given the trends underlying cuts to date.Another problem is that given the Croke Park agreement, there is a clear reason as to why the current spending cuts are getting weaker.
Either way - just as with receipts, I am not seeing any improvements anywhere in these numbers. If anything - Government spending is way too slow to adjust and is adjusting so far in a wrong direction.
4 comments:
Wouldn't it be grand to have the ability to do the Ostrich?
These pesky foreigners have an inate ability to blow the party.
Like, for Gods sake, it's very rude to tell the truth and do they not realise, these pesky foreigners, that they should be grateful for the job they have.
One would imagine that they actually knew what they were postulating.
It's quite obvious that the Earth is flat and Eire is at the centre.
And that young Gurgiev is obviously deluded.
But then again, he's not one of us so not to worry.
Lets listen to the IMF and ECB, who are true friends and tell us what the international markets want to hear.
Not
FFS
Constantin;
Thanks for reassuring me that Walt Disney is dead....I got a very different impression watching the Minister for Finance, Brian Lenihan, on RTE's 6.01 news last night. He still doesn't read the FT and seems to live in a parallel universe in Merrion Street.....
RMcD
What happens top the general economy when the deficit stimulus is finally removed by new and inevitable, (non-evadable) taxes?
It is all very well that a business can borrow whatever it wants for cashflow from the state, see previous post, but what about the consumer/voter/householder? They will have to bear the taxes twice, once to make up for the taxes not remitted to the exchequer, and once for their share!
Incentive to steal and then emigrate, anyone?
Thanks Gurdgiev, an exceleent analysis as usual.
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