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E SchizaPublic sector conference presentation 2012

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  • 1. A new age ofconstraints. The global body for professional accountants
  • 2. About the GECS• ACCA‟s quarterly economic survey• 3+ years of records •ACCA: Q1 2009 to Q3 2011 •ACCA and IMA: Q4 2011 to date• The largest and broadest of its kind •2,500 responses per quarter (1.6% error) •Ca. 10% in the public sector •Only IFAC SMP poll surveys more The global body for professional accountants
  • 3. 20 Recovery10 Confidence Government 0-10-20-30-40-50-60-70-80 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 The global body for professional accountants
  • 4. 40302010 0-10-20 Americas Middle East-30 Asia Pacific Central and Eastern Europe-40 South Asia Western Europe-50 Africa-60 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 The global body for professional accountants
  • 5. The fiscal response. The global body for professional accountants
  • 6. Africa Decrease Asia Pacific significantly Middle East Decrease slightly South Asia Stay the same Americas Increase slightly CEE Western Europe Ghana Zambia Uganda Mauritius Saudi Arabia Hong Kong China ex HK Nigeria Malaysia Singapore Russia UAE USA PakistanTrinidad & Tobago Canada UK Australia Cyprus Ireland 0% 25% 50% 75% 100% The global body for professional accountants
  • 7. Africa Asia Pacific Dangerous under Middle East Dangerous over South Asia Americas CEE Western Europe Ghana Zambia Uganda Mauritius Saudi Arabia Hong Kong China ex HK Nigeria Malaysia Singapore Russia UAE USA PakistanTrinidad & Tobago Canada UK Australia Cyprus Ireland 0% 10% 20% 30% 40% 50% The global body for professional accountants
  • 8. 80 Government will overspend60 USA40 Malaysia Mauritius Uganda20 Russia Zambia Spending Cyprus Trinidad & Tobago China will fall Nigeria Ghana 0 Pakistan Saudi Spending UK Arabia Hong-20 Canada Kong will grow UAE Singapore-40 Ireland Australia-60 Government will-80 underspend -100 -80 -60 -40 -20 0 20 40 60 80 100 The global body for professional accountants
  • 9. 1. Efficiency. The global body for professional accountants
  • 10. 60Primary spending as % of GDP in Europe 55 2008 50 Linear (2008) 45 40 35 30 3 3.5 4 4.5 5 5.5 6 Government efficiency (WEF) The global body for professional accountants
  • 11. 60Primary spending as % of GDP in Europe 55 2011 50 Linear (2011) 45 40 35 30 3 3.5 4 4.5 5 5.5 6 Government efficiency (WEF) The global body for professional accountants
  • 12. INEFFICIENCY COSTS REVENUE• Shift in public attitudes• Low returns on public spending• Loss of revenue due to poor tax administration• Lower tax morale• More so in a recession The global body for professional accountants
  • 13. 60Primary spending as % of GDP in Europe 55 2008 2011 50 Linear (2008) Linear (2011) 45 40 35 30 3 3.5 4 4.5 5 5.5 6 Government efficiency (WEF) The global body for professional accountants
  • 14. 2. Fiscal slippage. The global body for professional accountants
  • 15. IMF: “We got fiscalmultipliers wrong.We assumed 0.5;they are between 0.9 and 1.7”The global body for professional accountants
  • 16. Value-added business opportunities Austerity New orders Access to falling growth Sector-specific capital factors Global economy seen as making progressBusiness Poor size policies Very good Revenues policies falling Unstable More significant influence on confidencecustomers ACCA/IMA 2012: Global Economic Conditions Survey Q4 2011 The global body for professional accountants
  • 17. Unstable Sector- suppliers specific Potential for new orders? Unstable Finance & Poor customers Gov support Falling policy revenues „Excessive‟ Profitable„Excessive‟ Falling new austerity SME projects spending orders Global More significant influence on investment Economy improving ACCA/IMA 2012: Global Economic Conditions Survey Q4 2011 The global body for professional accountants
  • 18. Labour taxes only Capital taxes only Labour &capital taxes Real 10 yr yields Max add tax Max interest Max add tax Max interest Max add tax Max interest GDP Cons yield/GDP rate yield/GDP rate yield/GDP rateMathias Trabandt & Harald Uhlig, 2012. "How Do Laffer Curves Differ Across Countries?," NBER Chapters, in: Fiscal Policy after theFinancial Crisis, National Bureau of Economic Research, Inc. The global body for professional accountants
  • 19. 0Expected medium Projected trend term trend in Desired trend government -10 spending (W. Europe) -20 -30 -40 -50 -60 -70 -80 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 The global body for professional accountants
  • 20. 3. Liquidity and Solvency The global body for professional accountants
  • 21. Arlsanalp & Tsuda, 2012. “Tracking global demand for advanced economy sovereign debt," IMF Working Papers12/284, International Monetary Fund The global body for professional accountants
  • 22. DEBT SUSTAINABILITY• Debt < (NPV of future fiscal surpluses)• This is a moving target in every way.• In practice, policymakers use arbitrary thresholds • 120% debt/GDP is the best example The global body for professional accountants
  • 23. Delia Velculescu, 2010. "Some Uncomfortable Arithmetic Regarding Europe’s Public Finances," IMF Working Papers10/177, International Monetary Fund The global body for professional accountants
  • 24. 70 Old age dependency ratios, % 60 50 40 30 20 UK Eastern Europe Northern Europe 10 Southern Europe Western Europe 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2010Revision, http://esa.un.org/unpd/wpp/index.htm The global body for professional accountants
  • 25. 4. Perceptions and generalisations. The global body for professional accountants
  • 26. 0Expected medium- Private term change in Public government spending (UK) -10 -20 -30 -40 -50 -60 -70 Q4 2011 Q1 2012 Q2 2012 Q3 2012 The global body for professional accountants
  • 27. Government employees as % ofthe labour force Outside general government Within general government Germany Greece Denmark The global body for professional accountants
  • 28. 5. Competitiveness. The global body for professional accountants
  • 29. The global body for professional accountants
  • 30. Thanks! The global body for professional accountants