Belfast Telegraph

It's hard to see the light in this fog of statistics

By Brendan Keenan

As no doubt you know, if an object approaches the speed of light, the normal laws of physics start to break down. I learnt last week that, as economic growth approaches zero, the laws of statistics start to, if not exactly break down, become more difficult.

There was certainly more fog than light in the figures for the economy for the first three months of the year.

The confusion is mostly to do with the multi-national companies, which have become far more difficult to observe since the selling of relatively simple things like computers began to be be replaced with. . . well, what exactly does Google sell?

Even worse are the companies that don't really sell anything at all, but have set up their headquarters in Ireland; often for tax avoidance.

The six months to April were particularly odd, when the foreign companies that do earn profits here sent less of them out of the country, while the headquartered outfits, which bring profits in, usually from the UK, did less of it.

One's guess is that this last was partly due to Prime Minister David Cameron taking some of the heat off them - after some big names nailed up their brass plates in Ireland.

It's enough to make one sympathetic to Nicolas Sarkozy.

Looking back over the 12 months, total output of goods and services (GDP) grew by a tenth of 1% and GNP fell by nine-tenths.

To use a non-technical term, damn all.

There is a bit of helpful psychology, though.

The figures have been revised upwards as more data comes in. Output has grown in two of the last three quarters, after 10 consecutive quarters of steep decline. The restraint from the multi-nationals at the end of last year meant that GNP grew in 2010, the first annual increase since 2007.

Okay, as good news goes, it is pretty feeble. There is actually more solid ground for satisfaction in another figure - the balance of payments in Ireland's trading and other transactions with the rest of the world, which showed a small surplus last year. Economists had not expected a surplus until sometime this year.

The strange thing about having a balance of payments surplus is that it means Ireland as a whole is reducing its debt, even as the Government piles up its borrowings at a rate of €17bn a year. Private sector saving and loan repayments are more than offsetting this public borrowing.

It gives a new twist to the debate on how much austerity should be imposed.

Even worse are companies that don't really sell anything but have set up their HQ here, often for tax avoidance


From Belfast Telegraph