The macroeconomic environment in Ireland in 2009 presents challenges for business planning. Unemployment is high at 11% while inflation is low at -2.6%. Tax revenue has dropped significantly in just two years, falling over 30%. Further deterioration in the labor market is likely to increase social welfare spending and decrease tax revenue. In response, governments worldwide have announced massive stimulus spending packages totaling trillions of dollars, but there is uncertainty around where this money will come from and its effects.

1. Business Planning in 2009 The Macroeconomic Environment Seamus Coffey, Dept of Economics, UCC

3. Are we all out of luck?

5. The Unemployment Rate

6. Inflation

7. Per Capita GDP

8. Government Balance

9. The Public Finances

10. The God That Failed

11. Tax Revenue (€000s) Tax Revenue has dropped 30% in just two years. 2007 2008 2009 E Value Added Tax Income Tax Excise Stamps Corporation Tax Capital Gains Tax Customs Training & Employment Levy Unallocated 14,496,588 13,572,410 5,837,878 3,185,602 6,390,625 3,105,495 265,904 2,501 0 13,429,602 13,176,857 5,443,338 1,650,792 5,065,894 1,430,080 248,001 1,032 0 11,420,000 12,475,000 4,634,000 980,000 3,740,000 625,000 230,000 1,000 0 Total 47,249,352 40,777,196 34,400,000

12. Expenditure (€000s) Even with the announced expenditure “cuts” we are still spending more than we did two years ago. Further labour market deterioration is likely to increase social welfare spending (and reduce tax revenue) Vote or Group of Votes 2007 2008 2009E Health & Children 12,448,835 13,745,317 13,426,037 Social & Family Affairs 8,180,934 9,399,098 10,915,679 Education & Science 8,443,974 9,031,516 8,900,030 Other 15,534,992 17,136,863 14,162,658 Total 44,608,735 49,312,794 47,404,404

14. Closing the Gap More Taxes Less Spending Or just hope for the best!

15. Market Response – Worry!

16. Household Response – Save!

18. Me and a Million!

19. Me and a Trillion!