21/10/2014: Of Statistics: Ireland and ESA2010

Eurostat released a handy note showing revisions to euro area debt and deficit figures that arose as the result of conversion to ESA2010 methodology (yes, yes, that infamous inclusion of illicit trade and re-classification of R&D spending as investment, and much more).

You can read the full note here: http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/documents/Revisions-gov-deficit-debt-2010-2013.pdf

And the effects are:

Government deficit revisions:

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One clear outlier in the entire EU28 is... Ireland. We had the largest, by far, downward revision in our deficit/GDP ratio of some 1.5 percentage points, pushing our deficit down from 7.2% of GDP (ESA95) to 5.7% of GDP (ESA2010) overnight. No austerity, just accounting.

We were similarly 'fortunate' on the debt calculations side:

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While revised actual debt levels rose, under new rules, the revised debt/GDP ratio fell due to GDP push up under the new rules. Lucky charms...

Per note, relating to deficit revisions: "Ireland (-3.1pp for 2010, -0.1pp for 2011, -0.1pp for 2012 and +1.0pp for 2013): the 2010 and 2011 deficits were  revised mainly for other reasons (than ESA 2010 introduction) and the 2012 and 2013 deficits mainly due to  introduction of ESA 2010. The deficit for 2010 was increased mainly due to reclassification of the capital injection  to AIB and the deficit for 2011 due to various reasons such as an adjustment to accrual calculation for PRSI,  health contribution and National Training Levy. The revisions in the deficit for 2012 and 2013 are mainly due to  the classification of the Irish Bank Resolution Corporation Limited (IBRC) to the central government. " 

Per note, relating to debt revisions: "Ireland (+12.2pp for 2011, +10.3pp for 2012 and +7.2pp for 2013): the revisions in the debt are mainly due to  introduction of ESA 2010: the classification of the Irish Bank Resolution Corporation Limited (IBRC) to the central  government as it became a government controlled financial defeasance structure in 2011."

So our actual debt rose. But our debt/GDP and deficit/GDP ratios fell:

Enron would be proud...

19/10/2014: Of National Accounts and Ministerial Declarations

Here's an interesting take on the role of ESA2010 reclassifications on Euro area growth: http://euobserver.com/news/126110. Strangely, this topic is rarely discussed in Ireland which switched to ESA2010 standards ahead of majority of other countries.

And here's an illustration of the claim by Minister Noonan (made in his Budget 2015 speech) that Irish farming is a EUR26 billion sector:

Somewhere else, someone is producing EUR20 billion worth of 'farming' activity that Minister Noonan knows of... Maybe he or they can point us in that direction. But the above figures include much more than 'farming':

And the above figures include double-counting too, since they come from two different sides of the National Accounts (some of exports are in the Sector Output at factor cost). And they include net subsidies of some EUR1.5 billion (see http://trueeconomics.blogspot.ie/2014/10/7102014-subsidies-rained-on-irish.html) which no one, save possibly an Irish Minister, can describe as 'activity'.