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Default is Inevitable unless ..

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The EU has forecast that Ireland's Debt/GDP percent will reach 118% next year. This is viewed in most official circles as just about 'manageable' presuming favourable growth rates and adherence to current bailout terms.

However, it ignores the fact that, unlike most other EU states, there is a large divergence between Ireland's GDP and GNP as the former includes the enormous profits of multinationals which are taken overseas and don't really touch the local economy.

If GNP is used instead of GDP, Ireland's forecast Debt/GNP percent for 2012 shoots up to about 144%. Even if account is taken of Irish corporation profits tax paid by multinationals, the ratio hits 139%. This is off the scale and puts Ireland on a par with beleaguered Greece.

An Irish default is almost inevitable unless the EU, IMF and ECB apply much more flexible and realistic bailout terms.

Letter published in the Sunday Business Post on 29th May 2011.

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This page contains a single entry by Brian published on May 30, 2011 11:05 AM.

Approach to Bailout is a Disaster was the previous entry in this blog.

Judges' Pay and the Constitution is the next entry in this blog.

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