This week the Irish government got that wrong. They lied when asked if there were any discussions with the IMF or the EU – or at least finessed their answers to mislead (rather than merely obfuscate or avoid).These developments can be seen as sensitive – because they are. Any information provided might influence short-term economic developments, affecting the availability of funds for Irish businesses, or whether a business will decide to proceed with an investment in the country. However, providing false information also has an impact – and arguably a longer-term negative impact on the reputation of the government and the state.

At a time when statements/leaks were flowing freely from other governments, the EU, and elsewhere – and when the development (while gut-wrenching for those of us watching from afar) was not farfetched, I cannot understand what it was thought might be gained by having the news dragged out like this.

And now, of course, government ministers are claiming that the only two things that can’t happen are that corporation taxes should rise from their current level [1] and that the government cannot fall. An election, or a change in personnel within the government, would signal uncertainty, which would make this process more expensive (as markets treat uncertainty as risk) and damage whatever authority the government still retains in its negotiations.

[1] The issue of corporate tax levels is an important one, and more nuanced in Ireland than elsewhere. As an island nation (with accordingly higher distribution costs), which built much of its growth (before the property bubble) on inbound foreign investment, having a tax rate lower than the rest of Europe has been cited by multiple observers as one of the keys to the country’s economic success. Beyond the palaver about English-speaking, well-educated populations (both true, but of diminishing significance/value), corporate taxes (and, until recently, high levels of European structural investment) were key elements in the country’s economic growth. However, whether this is the one issue of government policy that should be retained, untouched, beyond the reach of the bureaucrats who are about to take over running the country, is less clear.

Following on from news that the economy fell into recession in the second quarter of 2008 (with two consecutive quarters of declining GDP), new figures out today (but not yet reported on RTÉ!) put the exchequer deficit for the year to date (the Irish government now operates on a calendar financial year) at €9.4bn, with full year predictions of €11.5bn. Some of that deficit is for capital spending, which is, of course, seen as an investment, and therefore worth borrowing for (on the basis that increased capacity in the future will more than counteract the cost of borrowing the money today). However, much of the – unforeseen – deficit is for current spending, and results both from cost overruns and decreased tax revenues.

There is, of course, a difference between government spending and the broader economy, but in this case the government figures reflect trends in the economy that are quite worrying, as well pointing to the contribution of government policy to our current difficulties. Tax revenue is already €3.6bn behind budget, reflecting declining economic activity (as VAT and stamp duty revenue declines), weaker markets (with falls in capital gains taxes), and substantial job losses. Current spending is €600m above target, despite well-publicized spending freezes, due at least in part to the increase of 80,000 in the live register (=unemployed). The Irish government will breach the EMU deficit limits this year, with, as Joan Burton of Labour notes, “a General Government Deficit of 5.5% of a falling GDP.” Figures would be worse were it not for significant increases in non-tax revenues (which includes dividends from semi-state companies among other things).

A large part of the problem for Ireland has been that Ireland is a small ‘open’ market economy, making us particularly responsive to changes in the global economy. When the dot com bubble burst, the spectacular economic growth of the mid-1990s disappeared. Now that the global economy has entered a period of serious crisis, the Irish economy risks catching pneumonia.

With a 50% rise in the numbers unemployed in the past year – to their highest rates in 10 years – the St Vincent de Paul Society (one of the larger charities providing aid to the poor in Ireland) has seen a 40% increase in calls for help to its offices in Dublin in the past year, and expects to spend €50m on aid this year. Next year, for the first time in a decade, Ireland is expected to have net outbound migration.

The government response so far has been to bring forward announcement of next year’s budget (widely expected to be an austerity budget) and to issue guarantees on savings in Irish-owned banks – itself not a bad way to calm nerves and improve confidence, but not a well-thought out plan, as it immediately fell foul of EU rules, which means the government is going to have to extend guarantees to banks with an Irish presence (though hopefully only on savings held by Irish residents), which will bring the potential exposure to well over the initial estimate of €440bn. By contrast, Irish GDP last year (and remember, it’s dropping) was €190bn.

ComReg was asked by ECORYS for help in identifying consumers who are willing to participate in a short web-survey on customer needs for postal services.  This is part of a study that ECORYS is undertaking for the European Commission on The Main Developments in the Postal Sector (2006-2008). The initial deadline of 31 March 2008 has now been extended to 31 May 2008.

The request can be viewed at http://www.comreg.ie/_fileupload/publications/CP46.pdfComReg wishes to thank those who have already participated in the survey and would urge other interested parties to participate prior to the extended deadline.

For session musicians, the record companies will set up a fund reserving at least 20 percent of the income during the extended term to them. For featured artists, original advances may no longer be set off against royalties in the extended term, which means the artist would get all the royalties during the extended term.

The commissioner also intends to propose a “use it or lose it” provision. In the case where a record company is unwilling to re-release a performance during the extended term, the performer can move to another label.

The claim from those pushing product placement is that banning it puts EU producers at an economic disadvantage. In a recognition of the serious problems with product placement, “advertising of products will not be allowed in news, current affairs, documentary, advice and childrens’ programmes.” The notion that news or documentary programming could contain product placement hadn’t really occurred to me previously – I suppose I should be grateful that the bar has been set somewhere, even if it is rather low. Another requirement – that “signals must appear when a programme containing product placement starts, when it ends and after commercial breaks” – may also have some limited value.

Other parts of the regulations may appear to offer protections in related areas, but again the bar is fairly low. For instance, commercial breaks “will be allowed every 30 minutes in TV films, cinematographic works and news programmes – but must not exceed 12 minutes an hour.” Existing Irish regulations set 45 minutes as the maximum frequency of breaks during films. Depending on how the regulation is worded, this 45 limit may be able to continue or the Irish authorities may be required to lower the floor to 30 minutes.