Some positive news on the economy front: Q1 2012
Non-Financial Quarterly Institutional Accounts are out today from CSO (link) and headline numbers showing no significant deterioration and even improvements
in areas that do matter, except for the one that matters most to Government
plans for the future.
The text below mostly quotes from CSO release linked above, with my comments in italics:
Point 1: The gross disposable income of households was
€21,986m in Q1 2012 – an increase of €771m or 3.6% y/y.
This was driven by wages rising by +€170m and profits
increases for the self employed of +€365m. Lower interest repayments on loans
of -€272m further increased gross disposable income.
Point 2: Household expenditure fell marginally by €9m in Q1
2012 compared to Q1 2011 to €19,361m.
Point 3: Points 1 and 2 above mean that gross household
savings increased from €2,439m in Q1 2011 to €3,209 in Q1 2012. The gross
savings ratio, which expresses savings increased from 11.2% of gross disposable
income in Q1 2011 to 14.2% in Q1 2012. Meanwhile, consumption of fixed capital
by households fell from €1,056m in Q1 2011 to €1,037m in Q1 2012, and overall
deficit in capital account for the households was shallower at -€154m in Q1
2012 as opposed to -€296m a year ago. This suggests that while deleveraging is
still on-going, the rate of capital paydown has slowed slightly. In other
words, households have slowed deleveraging and potentially increased capital acquisition.
Albeit both effects are very small, these are welcome, if confirmed.
Point 4: An increase in current taxes of €673m between Q1
2011 and Q1 2012 was slightly offset by a fall of €312m in social contributions
over the same period, resulting in an increase of €361m in the resources side
of the government account.
Point 5: On the uses side of the account social benefits paid
by government increased by €289m.
Point 6: Combining Points 4 and 5, the government savings
deficit (resources less uses) showed an improvement of €125m – up from -€3,700m
in Q1 2011 to -€3,575 in Q1 2012.
Point 7: When account is taken of investment and capital
transfers, the net borrowing of the government sector amounted to €4,182m in Q1
2012 compared with €4,489m in Q1 2011.
Point 8: combining Points 4-7: in the nutshell, taxes went
up faster than spending went up and voila we are ‘doing less worse’.
Point 9: A major bit: the rest of the world recorded a
surplus of €994m with Ireland in Q1 2012 so that Ireland recorded a current
account deficit with the rest of the
world compared with a surplus of €1910m in Q1 2011. A swing of €2,904m in the
wrong direction. Recall that per economics gurus of Green Jersey type, current
account surpluses are the only hope
for Ireland’s recovery. Oops…
