How much will we owe in 2012?
Ireland’s Debt/GDP reached a record low of 25% in 2006. At the end of 2009, it stood at 66%, as the government went on a borrowing spree to bail out banks while tax revenues plummeted. Our gross debt ratio is projected to rise to 84% by end 2010.
Where will it end? Davy, the government stockbroker, expect the ratio to peak at 98% in 2012. [Though it appears Dan Boyle disagrees.].
Last year, Brian Lenihan announced €3 billion in public spending cuts. He plans cuts of “at least” €3 billion this year, and (if his government survives that long) another €3 billion at the end of 2011.
If he manages all that, debt will still rise to 98% of GDP by 2012.
Except, Davy assume a 3% “average real GDP growth rate over 2010-2014”.
So they expect the economy to grow 3% a year while the government take €9 billion out of the system.
That’s some assumption.
Last year, GDP shrank 11%. This year, its stable. But so is a corpse.
The ESRI expects growth of 0.25% in 2010, followed by 2.75% in 2011.
98% is looking optimistic.