Joan Burton the Irish Social Protection Minister has come out today and said unless the eurozone crisis is resolved quickly (unlikely, as it appears to be getting worse) Ireland will be forced to look for a second bailout. To put in context Irelands debt has doubled since 2009. (€65bn Jun 2009, €119bn this month) as thousands have emirgrated to help ease the unemployment burden.

IRELAND will have to avail of a second bailout unless the European debt crisis is resolved quickly, according to Social Protection Minister Joan Burton.

Her comments appeared to put her at odds with the unconditional statements by the Taoiseach Enda Kenny and Finance Minister Michael Noonan, who dismissed talk of a second bailout as “ludicrous”.

In a hard-hitting interview with the Sunday Independent, Ms Burton refused to rule out the likelihood of a second bailout.

 

A second bailout would make sense as Ireland’s debt is growing and the austerity is taking its toll on the economy in much the same way as has happened in Greece.

Irish Exchequer tax receipts did not perform well in 2011 compared to both 2010 and the target, with most of the improvement (some 80%) accounted for by reclassification of the Health Levy as tax revenue and addition of the temporary, extra-Budget 2011 Pensions Levy.
 
Irish Exchequer tax revenues for 2011 cannot be interpreted as being indicative of any serious improvement. Factoring in Pensions Levy and delayed receipts (Corporation Tax receipts for December carried over into 2012), overall Exchequer revenue fell 3.1% short of the target set in Budget 2011, not 2.5% claimed by the Department of Finance.
 
The above shortfall amounts to 0.66% of the expected 2011 GDP and 0.81% of our expected GNP and comes after significant increases in taxation burden passed in the Budget 2011, suggesting that the economy’s capacity to generate tax revenues based on the current structure of taxation is exhausted.
 

The Irish Prime Minister (Taoiseach) Enda Kenny and Finance Minister Michael Noonan were quick to dismiss her comments as rubbish, despite the fact that these two are teachers by profession and Joan Burton is a charted accountant by profession.

Her comments follow on from respected CitiGroup economist Willem Buiter who during the week said Ireland should start preparing for a second bailout months in advance and not “in a state of near panic at the last-minute”.

It must be remembered that in the run up to the announcement of the original bailout there was a string of denials by the previous government ministers right up to the day the press conference was called. Indeed the two present parties in coalition less than a year together have already backtracked on a raft of pre-election promises, so don’t exactly have a great track record.

 Sources: Irish Independent, , financedublin

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