Senior Department of Finance officials issued the warning yesterday two years after the “leprechaun economics” controversy, saying that using GDP to check Ireland’s financial health is leading to entirely inaccurate results.
Speaking during an eight-hour cross-party Dáil Public Accounts Committee (PAC) meeting during which it was also revealed that Ireland’s debt levels amount to €40,000 per person, Department of Finance secretary general, Derek Moran, said GDP is not working for Ireland.
He said the reality is that using GDP to check economic growth is “over-inflating living standards” and wider finances, giving an inaccurate view of the national situation.
“Oh, absolutely. Debt to GDP is a misleading indicator of our position regarding our national indebtedness. You’d be better off looking at GNIStar,” said Mr Moran when asked if the 2016 “leprechaun economics” controversy is still apparent.
The senior official said that since the 2016 controversy the department has been examining ways to more accurately check Ireland’s economic growth, including the creation of a new system called GNIStar. In order to give a better indication of the country’s economic health, this system removes the profits of multinational firms which do not make or sell anything in Ireland despite being based in this country.
However, Mr Moran said Ireland must still use GDP when it comes to giving analysis to the European Commission as it is the legal system used — meaning the country’s financial situation is being repeatedly over-inflated internationally: “We are in a unique and difficult position.”
Speaking during the same meeting, the Department of Finance’s chief economist, John McCarthy, agreed with PAC members who said the issue “sounds like McCreevy economics again” as while officially the fundamentals of the economy are said to be strong the way this is being checked is questionable.
Meanwhile, the PAC was told by Mr Moran yesterday that Ireland’s national debt is still at just more than €200bn, despite the recession officially ending almost five years ago. Mr Moran said that it amounts to every “man, woman and child” in the country owing €40,000 to other states which loaned Ireland money during the recession.