Transcript Insert Title Here Date - Pharmachemical Ireland

Ireland as a place to do business
November 2010
Ireland’s fiscal adjustment remains on track
 Ireland is acknowledging upfront the costs of rescuing
the banking sector.
 With a worst-case scenario of €50 billion, the cost is high
but manageable.
 Though the debt-to-GDP ratio will reach about 110115%, it is bearable and not exceptionally out of line
internationally:
– US projected to reach 110% by 2015; Italy close to
120%
– Greece projected to reach 130% of GDP; Belgium
has had high debt burden for decades
– Japan’s net liabilities are approaching 150%
Ireland’s fiscal adjustment remains on track
 The Irish Exchequer has ample cash reserves and is
fully funded through to the middle of 2011.
 The Government’s plan from December 2009 is working.
 The deficit, excluding the banking costs, is falling and is
in line with projections.
 Both tax revenue and expenditure are on target.
 The economy in the first half of 2010 has performed in
line with Government forecasts.
 In October, the IMF revised its GDP forecast for Ireland
to -0.3% from -0.6% for this year and expects growth of
2.3% in 2011.
Resolute action on public finances
Adjustments in public finances to date
July 2008 – April 2009
Budget 2010
€10.5 bn
€4 bn
Adjustments planned – December 2009
Budget 2011
Budget 2012
Budget 2013
Budget 2014
€3 bn
€2 bn
€1.5 bn
€1 bn
Though adjustments for 2011-2014 will be higher than previously
anticipated, even in the worst-case scenario Ireland halfway
through the process and has four years to complete the task.
Debt servicing costs up, but not as high as in the 1980s
Debt servicing as % of total revenue
30.0
25.0
20.0
15.0
10.0
5.0
0.0
1982
1987
1992
1997
2002
2007 2012(f)
Exports have rebounded strongly
E x p o r t s o f g o o d s a n d s e r v ic e s
Annual % change
1 0 .0
7 .5
Percent
5 .0
2 .5
0 .0
-2 .5
-5 .0
Q1
Q3
07
Q1
Q3
08
Q1
Q3
09
Q1
10
S o u rc e : R e u te rs E c o W i n
Ireland has critical mass in high-tech sectors
 Thanks to clusters and networks of multinational companies,
Ireland has achieved critical mass in a number of high-tech
sectors.
 8 of the top 10 global medical technology companies have
manufacturing in Ireland - employment in the sector on a per
capita basis is the highest in Europe.
 8 of the top 10 pharmaceutical companies have operations in
Ireland.
 Many major software and hardware companies have
significant operations in Ireland
 The cluster of internet-based companies is growing because
Ireland is the location of choice.
 Business functions located in Ireland are shifting to higher
value added activities and are cases becoming increasingly
R&D-driven.
The base of indigenous companies is strong
 Half of the medical technology companies are Irish
 There is a vibrant software sector exporting mainly to the
UK and the US.
 Ireland has a natural competitive advantage in the food
and drinks sector – in fact, Ireland is the largest exporter
of beef in Europe and fourth largest in the world.
 Indigenous manufacturers are becoming increasingly
sophisticated.
 Thanks to competitive adjustment achieved to date,
Ireland is pricing itself back into international markets.
Labour market is flexible – wage costs are falling
Unit labour cost
forecast % change 2008-2011
Greece
Portugal
Italy
United Kingdom
Poland
EU-27
Euro area
Germany
France
Spain
Ireland
-10.0
-5.0
0.0
5.0
10.0
Source: European Commission forecasts, May 2010
Labour market is flexible – wage costs are falling
Employment and pay outlook – IBEC quarterly survey
Basic pay rates in 2009
-2.4%
Change to pay bill
-9.8%
Share of firms that cut basic pay
25%
Outlook for 2010
Expected change in pay rates
-1%
Change to pay bill
-3%
Share of firms to cut basic pay
15%
Outlook for 2011
Expected change in pay rates
0.2%
Change to pay bill
0.3%
Share of firms to increase basic pay
22%
Non-pay business costs are coming down
Energy price differential (%)
Ireland vs EU-27 average
40
30
20
10
0
-10
-20
2007
2008
Electricity
2009
Gas
Source: Eurostat
Consumer prices are falling
In f la t io n - H a r m o n is e d In d e x o f C o n s u m e r
P r ic e s
5
4
3
Percent
2
1
0
-1
-2
-3
-4
2005
2006
Ir e la n d
2007
2008
2009
2010
E u ro area 12
S o u rc e : R e u te rs E c o W i n
Ireland’s fundamental strengths remain
% with tertiary education
(age 25-34)
50
40
30
20
10
0
Ireland Germany France
Poland
UK
US
OECD
average
Source: OECD
Ireland’s fundamental strengths remain
Government capital investment
( % of GDP in 2009)
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Ireland
Netherlands
France
EU-27
UK
Germany
Source: European Commission forecasts, May 2010