Economic Data Suggests Slower Times in 2008, So Spend More Brian!

So the figures on the live register come out today with something for all sides. The live register is down 13,500 on last month. This is clearly something government will look at in hope, however all the opposition parties will emphasise the fact that the seasonally adjusted number on the live register has risen by 8,000 or so this year.  Leo Varadker reckons that this means we will hit an unemployment rate of 5.5% by 2008.

The unemployment rate could well be a problem, the CSO stats are not designed to measure unemployment but do make a stab at it putting the rate at 4.7% where it has been for the past few months. The IMF predicted growth of 4.7% for next year. Today’s Central Bank economic quarterly bulletin however is probably more worrying. Where talk for next years growth has been trimmed back to around 4%-4.5% the bank is predicting GNP growth of around 3.25% and GDP of 3.5% (bearing in mind the distinction between the two where GNP tends to reflect what we keep in the country, this is a highly worrying trend).

The pressure on government is likely to be ratcheted up by the opposition but they will surely be relieved to have the knock on easing of inflationary pressures thanks to lower growth with Central Bank suggestions of 2.5%-3% depending on the measure one prefers to use. We should probably be pretty happy that the only party willing to take such a realistic view on the economy at election time are in power.

Considering talk of budget deficits and economic slowdown and increases in unemployment, there is also huge pressure on the government to ‘do something about it’. With the scrapping of the estimates process in its usual form they are probably able to shorten the political damage of shrunken budgets however their policy agenda is equally opaque since we are now left entirely waiting until December. With the budgetary issues in mind and the recent freezes in the HSE acting as clear indications of the governments unwillingness to spend into a deficit/slowdown, there is interesting talk from rabidly Keynesian IBEC on spending on infrastructure into a construction downturn.

They are calling for an additional 1% of GNP to be spent on the NDP as a means of managing the slowdown in construction and, if my Keynes is correct, spending our way out of a downturn by stimulating demand and jobs. I await the heralding of welfare state and mixed economies, but I may be left waiting.