In this week’s public policy bulletin we take a look at a new suite of proposals from the European Commission aimed at reforming overall economic governance in the Union. We also take a look at the latest GDP estimates from the CSO as well as a report from the OECD on workers wages. In addition, we review the latest Consumer Sentiment Index from the Irish League of Credit Unions as well as the March 2023 labour market statistics for Northern Ireland.
European Commission proposes new economic governance rules
This week the European Commission presented a series of legislative proposals designed to implement a comprehensive reform of the EU's current economic governance rules. The central objective of these proposals is to strengthen public debt sustainability and promote sustainable and inclusive growth in all Member States through reforms and investment. Amongst the measures introduced include the issue of country-specific “technical trajectories” by the Commission to individual Member States who have a government deficit above 3 percent of GDP or public debt above 60 percent of GDP. This trajectory will seek to ensure that debt is put on a plausibly downward path or stay at prudent levels. You can read the full suite of proposals issued by the Commission here.
Ireland’s GDP falls 2.7 percent in first quarter of 2023 – CSO
In a statistical release issued this week, the CSO reported that Gross Domestic Product (GDP) fell by an estimated 2.7 percent in Quarter 1 2023, when compared with Quarter 4 2022. Noting how the fall in GDP was largely driven by a drop in the industry sector in quarter 1 2023 (compared to the “very high levels” seen in the second half of 2022), GDP nonetheless stood 6.4 percent higher than the same period in 2022. You can read the full results of the findings here.
Workers paying higher taxes as wages rise but face drop in real income as inflation bites – OECD report
Taxes on labour increased in 2022 as rising nominal wages pushed workers into higher tax brackets and reduced their eligibility for tax credits and cash benefits, according to research published this week from the OECD. In its Taxing Wages 2023 report, the think tank also found that while nominal wages increased, high inflation across the OECD caused wages to decline in real terms, resulting in a “double blow” for workers. Moreover, according to the report, while effective tax rates have risen in a majority of OECD countries across a range of income levels and household types, 17 OECD countries automatically adjust personal income tax systems in line with inflation, while the remaining 21 do so on a discretionary basis.
Consumer sentiment at 13 month high – Irish League of Credit Unions
Irish consumer sentiment has improved significantly in April to its best level in 13 months according to the latest Consumer Sentiment Index from the Irish League of Credit Unions. According to the Index, the increase in confidence was driven by a clear drop in negative views on the economy and household finances. However, the report goes on to caution that this stronger sentiment largely seems to be the result of an easing in fears rather than any sense that conditions are improving markedly at present. Moreover, the report suggests that although fears of a full economic or financial meltdown may be fading, many consumers still face significant uncertainty and substantial financial strains.
Latest labour market statistics for Northern Ireland released
The latest labour market statistics for March 2023 have been released by the Northern Ireland Statistics and Research Agency. According to the findings, the number of employees receiving pay through HMRC PAYE in NI in March 2023 was 790,600, a 0.5 percent increase over the month and a 2.3 percent increase over the year. HMRC PAYE data indicated that NI employees had a median monthly pay of £2,110 in March 2023, an increase of £56 (2.7 percent) over the month and an increase of £177 (9.2 percent) over the year. In contrast to these improvements, the claimant count estimate increased by 2.3 percent over the month to March 2023 from the revised estimate for February 2023. The claimant count rate also increased slightly over the month, to 3.7 per cent, which was the first increase since September 2022.