NCB Economics: November Exchequer Returns Data.

The Department of Finance (DoF) has this evening released the latest Exchequer Returns data, which detail the Irish government’s fiscal performance to the end of November.

At a headline level, the release contains few surprises given that the DoF released its “2012 Estimates of Receipts and Expenditure”, which provided an update on where it saw the public finances coming in for the full year, incorporating then unpublished end-November Exchequer data, on Friday night. This revealed a projection of weaker than expected tax revenues and an overshoot on the current voted expenditure side for the final two months of the year.

For the first 11 months of 2012 tax revenues came in at €33.8bn, which was 0.5% behind profile (€33.9bn). November’s tax receipts were €267m weaker than expected, following the €289m miss seen in October. The main areas of underperformance were income tax (€231m behind profile), reflecting lower than expected returns from the self-employed, and excise (€179m behind profile).

On the voted expenditure side, after adjusting for department balances, we see that ytd spending (€40.6bn) is €0.25bn more than had been projected. Of the 16 expenditure headings, some 13 are under budget, with the overspend in Social Protection (€610m above profile) and Health (€321m above profile) more than cancelling out the discipline seen elsewhere.

Overall, while the misses on tax revenue and voted expenditure are concerning, we note that the 2012 Estimates project a full-year General Government Balance of 8.2% of GDP, in-line with NCB’s forecast (8.2%) and slightly better than the government’s previous forecast of 8.3%. This is down to a better than expected deficit on the capital account.

However, looking to 2013, the need for further corrective action on both the revenue and spending fronts in tomorrow’s budget, due to be delivered by Minister for Finance Michael Noonan at 2.30pm Irish time, is clear to see given the results of the two latest Exchequer Returns.

Philip O’Sullivan, Chief Economist, NCB Stockbrokers Limited,