Photo AI
Outline, using appropriate figures, how the Irish economy performed in the past twelve months in each of the following areas: (i) employment; (ii) interest rates; (iii) price inflation; (iv) government taxation. - Leaving Cert Economics - Question 8(a) - 2007
Question 8(a)
Outline, using appropriate figures, how the Irish economy performed in the past twelve months in each of the following areas: (i) employment; (ii) interest rates; (... show full transcript
Worked Solution & Example Answer:Outline, using appropriate figures, how the Irish economy performed in the past twelve months in each of the following areas: (i) employment; (ii) interest rates; (iii) price inflation; (iv) government taxation. - Leaving Cert Economics - Question 8(a) - 2007
Step 1
Employment
Answer
In the past twelve months, the Irish economy saw the creation of 76,800 new jobs by the end of February. The number of jobs rose by 3.8% to 2.071 million at the end of February. However, this growth has been tempered by a slower rate of economic growth due to job losses. As of May 2007, there were 159,800 persons recorded on the live register, representing approximately 4.5% of the labor force. The Central Bank predicts an average unemployment rate of 4.5% for the year 2007.
Step 2
Interest Rates
Answer
Interest rates have continued to rise over the last year. The European Central Bank (ECB) has raised the base interest rate six times in the past twelve months, with the most recent increase occurring in June 2007. The current base rate is now at 4.0%, with further increases expected in the Autumn. The rise in interest rates has affected the cost of borrowing, particularly increasing mortgage rates.
Step 3
Price Inflation
Answer
Price inflation has also been a significant issue in Ireland. Inflation rates have increased, being nearly double the average inflation rate of approximately 2.2%. This increase can be attributed to rising consumer prices and international oil prices, which have impacted general living costs and contributed to inflation pressures.
Step 4
Government Taxation
Answer
In the 2007 Budget, the government announced a decrease in the higher rate of income tax from 42% to 41%, while also widening tax brackets to alleviate the tax burden on citizens. The standard rate of tax, however, remained unchanged. Additionally, some minimum wage earners were removed from the tax net. In terms of indirect taxes, there was no change to VAT rates, but specific taxes, such as excise duties on cigarettes, increased by 50 per pack, marking a rise of 7.6%. Property taxes, including mortgage interest relief for first-time buyers, were adjusted with a decline in tax relief for buyers.