Government's Expenditure for 2010
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The International Context • The worst global crisis since the 1930’s, has led to drastic increases in deficits and in the levels of unemployment • In September 2009, there were 22 million unemployed European citizens • There are signs that the economic recession might be on the decline, however, the acceptable levels of employment may still be distant from being reached • The majority of the EU member states experienced negative economic growth in 2009 and the Commission is predicting that this trend is set to continue during 2010 • Globally, there have been considerable decreases in terms of investment and consumption The Local Scenario • Malta has not been hit by the collapse of the financial markets, but the Maltese economy has felt the implications of the international economic crisis • The correct timing of decisions taken by the Government (diversification, investment in education and training) and the abrupt interventions during the financial crisis have helped to soften the impact and keep the increase in unemployment at a lower rate than the EU • The EU Commission and the IMF have positively commented on the government’s actions to save jobs The Local Scenario • Reductions in the government’s revenue have been mainly influenced by decreases in the levels of income tax collected and led to Excessive Deficit Procedures • Need for continuity in the road leading to sustainability The World’s Economy Real GDP 2008 2009 2010 2008 2009 2010 Country Actual October Projected Country Actual October Projected Member States (EU27) S 0.9 ‐4.1 0.7 Portugal S 0.0 ‐2.9 0.3 Euro Area (EA16) S 0.8 ‐4.0 0.7 Romania S 7.1 ‐8.0 0.5 Slovakia S 6.4 ‐5.8 1.9 EU Member States Slovenia S 3.5 ‐7.4 1.3 Austria S 1.8 ‐3.7 1.1 Spain S 1.2 ‐3.7 ‐0.8 Belgium S 1.2 ‐2.9 0.6 Sweden S ‐0.2 ‐4.6 1.4 Commission European Source: Bulgaria S 6.0 ‐5.9 ‐1.1 United Kingdom S 0.7 ‐4.6 0.9 Cyprus 3.7 ‐0.7 0.1 Czech Republic S 3.2 ‐4.8 0.8 Candidate Countries Denmark S ‐1.1 ‐4.5 1.5 Croatia S 2.4 ‐5.8 0.2 Estonia S ‐3.6 ‐13.7 ‐0.1 FYRo Macedonia 5.0 ‐2.0 1.5 Finland S 0.9 ‐6.9 0.9 Turkey S 1.1 ‐5.8 2.8 France Q 0.7 ‐2.2 1.2 Germany S 1.3 ‐5.0 1.2 EFTA Greece 2.9 ‐1.1 0.3 Iceland S 0.3 ‐9.8 1.9 Hungary S 0.5 ‐6.5 ‐0.5 Norway Q 2.0 ‐2.2 0.6 Ireland S ‐2.3 ‐7.5 ‐1.4 Switzerland S 1.6 ‐2.4 ‐0.1 Italy S ‐1.0 ‐4.7 0.7 Latvia S ‐4.6 ‐18.0 ‐4.0 Other non‐EU Countries Lithuania S 3.0 ‐18.1 ‐3.9 China 9.0 8.7 9.6 Luxembourg S ‐0.9 ‐3.6 1.1 Japan S ‐0.7 ‐5.9 1.1 Malta Q 1.6 ‐2.2 0.7 Russia S 5.6 ‐7.2 2.3 Netherlands S 2.1 ‐4.5 0.3 USA S 1.1 ‐2.5 2.2 Poland 4.8 1.2 1.8 The World’s Economy Unemployment Rate 2008 2009 2010 2008 2009 2010 CountryActual October Projected Country Actual October Projected Member States (EU27) S 7.0 9.1 10.3 Portugal S 7.7 9.0 9.0 Euro Area (EA16) S 7.5 9.5 10.7 Romania S 5.8 9.0 8.7 Slovakia S 9.5 12.3 12.8 EU Member States Slovenia 4.4 6.7 8.3 Austria 3.8 5.5 6.0 Spain S 11.3 17.9 20.0 Belgium S 7.0 8.2 9.9 Sweden S 6.2 8.5 10.2 EuropenSource: Commission Bulgaria 5.6 7.0 8.0 United Kingdom S 5.6 7.8 8.7 Cyprus 3.6 5.6 6.6 Czech Republic 4.4 6.9 7.9 Candidate Countries Denmark 3.3 4.5 5.8 Croatia S 8.4 10.0 9.8 Estonia S 5.5 13.6 15.2 FYRo Macedonia S 33.8 35.6 36.1 Finland S 6.4 8.5 10.2 Turkey S 9.8 13.5 13.9 France S 7.8 9.5 10.2 Germany S 7.3 7.7 9.2 EFTA Greece S 7.7 9.0 10.2 Iceland S 4.6 8.7 10.4 Hungary S 7.8 10.5 11.3 Norway 2.5 4.8 5.0 Ireland S 6.0 11.7 14.0 Switzerland 2.2 3.9 5.2 Italy S 6.8 7.8 8.7 Latvia S 7.5 16.9 19.9 Other non‐EU Countries Lithuania S 5.8 14.5 17.6 China 4.2 ‐‐ Luxembourg 4.7 6.2 7.3 Japan 4.0 5.8 6.3 Malta Q 5.9 7.1 7.4 Russia S 5.6 7.2 6.8 Netherlands 2.8 3.4 5.4 USA S 5.8 9.2 10.1 Poland S 7.1 8.4 9.9 The World’s Economy Government Balances - Ratio to GDP 2009 2010 2009 2010 Country 2008 Actual October Projected Country 2008 Actual October Projected Member States (EU27) S ‐2.3 ‐6.9 ‐7.5 Portugal S ‐2.7 ‐8.0 ‐8.0 Euro Area (EA16) S ‐2.0 ‐6.4 ‐6.9 Romania S ‐5.5 ‐7.8 ‐6.8 Slovakia S ‐2.3 ‐6.3 ‐6.0 EU Member States Slovenia S ‐1.8 ‐6.3 ‐7.0 Austria ‐0.4 ‐4.3 ‐5.5 Spain S ‐4.1 ‐11.2 ‐10.1 Belgium S ‐1.2 ‐5.9 ‐5.8 Sweden 2.5 ‐2.1 ‐3.3 Commission European Source: Bulgaria 1.8 ‐0.1 ‐1.2 United Kingdom S ‐5.0 ‐12.1 ‐12.9 Cyprus 0.9 ‐3.5 ‐5.7 Czech Republic S ‐2.1 ‐6.6 ‐5.5 Candidate Countries Denmark 3.4 ‐2.0 ‐4.8 Croatia ‐1.4 ‐3.7 ‐3.0 Estonia ‐2.7 ‐3.0 ‐3.2 FYRo Macedonia ‐1.0 ‐4.0 ‐3.5 Finland 4.5 ‐2.8 ‐4.5 Turkey S ‐2.2 ‐7.9 ‐6.8 France S ‐3.4 ‐8.3 ‐8.2 Germany 0.0 ‐3.4 ‐5.0 EFTA Greece S ‐7.7 ‐12.7 ‐12.2 Iceland S ‐‐21.2 ‐16.9 Hungary ‐3.8 ‐4.1 ‐4.2 Norway ‐ 7.9 10.4 Ireland S ‐7.2 ‐12.5 ‐14.7 Switzerland ‐‐2.9 ‐3.6 Italy S ‐2.7 ‐5.3 ‐5.3 Latvia S ‐4.1 ‐9.0 ‐12.3 Other non‐EU Countries Lithuania S ‐3.2 ‐9.8 ‐9.2 China ‐‐‐ Luxembourg 2.5 ‐2.2 ‐4.2 Japan S ‐3.8 ‐8.0 ‐8.9 Malta Q ‐4.7 ‐4.5 ‐4.4 Russia S ‐‐6.5 ‐2.6 Netherlands S 0.7 ‐4.7 ‐6.1 USA S ‐6.4 ‐11.3 ‐13.0 Poland S ‐3.6 ‐6.4 ‐7.5 Public Debt as a % to GDP 2009 2010 2009 2010 Country 2008 Actual October Projected Country 2008 Actual October Projected Member States (EU27) S 61.5 73.0 79.3 Portugal S 66.3 77.4 84.6 Euro Area (EA16) S 69.3 78.2 84.0 Romania 13.6 21.8 27.4 Slovakia 27.7 34.6 39.2 EU Member States Slovenia 22.5 35.1 42.8 Austria S 62.6 69.1 73.9 Spain 39.7 54.3 66.3 Belgium S 89.8 97.2 101.2 Sweden 38.0 42.1 43.6 EuropenSource: Commission Bulgaria 14.1 15.1 16.2 United Kingdom S 52.0 68.6 80.3 Cyprus 48.4 53.2 58.6 Czech Republic 30.0 36.5 40.6 Candidate Countries Denmark 33.5 33.7 35.3 Croatia 33.5 37.8 39.2 Estonia 4.6 7.4 10.9 FYRo Macedonia 20.8 25.5 28.3 Finland 34.1 41.3 47.4 Turkey 39.5 47.3 49.8 France S 67.4 76.1 82.5 Germany S 65.9 73.1 76.7 EFTA Greece S 99.2 112.6 124.9 Iceland 13.8 53.3 65.4 Hungary S 72.9 79.1 79.8 Norway ‐17.6 54.3 50.6 Ireland 44.1 65.8 82.9 Switzerland 36.5 42.8 44.9 Italy S 105.8 114.6 116.7 Latvia 19.5 33.2 48.6 Other non‐EU Countries Lithuania 15.6 29.9 40.7 China ‐‐‐ Luxembourg 13.5 15.0 16.4 Japan S 173.1 189.8 197.6 Malta Q 63.8 68.5 70.9 Russia ‐ 7.7 10.4 Netherlands 58.2 59.8 65.6 USA 70.7 64.8 75.1 Poland 47.2 51.7 57.0 International Trade Imports Imports 2,616.90 2,630.40 Imports 2,084.10 Exports Source: National Statistics Office Exports 1,659.20 1,534.70 Exports 1,188.40 2007 2008 2009 €'000,000 - January-September Employment Gainfully Occupied 145,073 144,743 142,179 Source: National Statistics Office 139,950 138,713 137,910 2004 2005 2006 2007 2008 2009 (Jun) Employment Gainfully Occupied 2007 2008 2009 Sector (Jan‐Dec) (Jan‐Dec) (Jan‐Jun) Construction 11,662 12,148 12,548 Hotels & Restaurants 9,747 10,141 9,918 Source: National Statistics Office Transport & Communication 10,757 11,040 11,309 Financial Intermediaries 5,353 5,577 5,694 Manufacturing 23,647 22,687 20,756 Wholesale & Retail Trade 21,409 21,831 22,095 Others 59,604 61,649 62,423 Total 142,179 145,073 144,743 Employment Generation Public & Private Sectors 50,000 105,000 48,000 100,000 46,000 Source: National Statistics Office 44,000 95,000 42,000 90,000 40,000 85,000 38,000 36,000 80,000 2002 2003 2004 2005 2006 2007 2008 2009 (May) Public Sector Private Sector Cash in Hand & Deposits Net Issuance of Government Bonds € 116.0m €194.2m € 248.8m Private Equities & Bonds € 97.0m € 119.0m €264.0m 8,275.3 8,571.4 8,403.6 7,451.7 7,085.0 6,797.9 6,479.1 6,636.9 Source:Central Bank ofMalta 5,779.5 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Sep-09 €'000,000 Cash in Hand & Deposits 9,000.0 8,800.0 119.0 264.0 194.2 8,600.0 Source:Central Bank ofMalta 248.8 8,400.0 97.0 116.0 8,200.0 8,571.4 8,403.6 8,000.0 8,275.3 7,800.0 Dec-07 Dec-08 Sep-09 Total Cash in Hand and Deposits Net Issuance of Government Bonds Private Equities & Bonds Stock Exchange Indices 4,981 4,873 4,938 Source:Central Bank ofMalta 3,376 3,069 3,208 3,202 2,200 2,126 1,871 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 (Sep) Inflation Retail Price Index 6 5 4 Source: National Statistics Office 3 2 1 Set 2009 0 -1 -2 Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 12-month moving average rate Annual rate Malta’s Tax Burden Compared to other EU Member States Member State Rate Member State Rate Member States (EU27) S 39.8 Ireland 31.2 Euro Area (EA16) S 40.4 Italy S 43.3 Latvia 30.5 Austria S 42.1 Lithuania 29.9 Belgium S 44.0 Luxembourg S 36.7 Commission European Source: Bulgaria 34.2 Malta Q 34.7 Cyprus S 41.6 Netherlands S 38.9 Czech Republic S 36.9 Poland S 34.8 Denmark S 48.7 Portugal S 36.8 Estonia 33.1 Romania 29.4 Finland S 43.0 Slovakia 29.4 France S 43.3 Slovenia S 38.2 Germany S 39.5 Spain S 37.1 Greece 32.1 Sweden S 48.3 Hungary S 39.8 United Kingdom S 36.3 Malta’s Tax Burden Compared to other EU Member States 50 Member States 8 18 SE DK 45 Source: European Commission European Source: BE FI FR IT AT 40 CY EA16** DEEU27**HU NL SI ES LU PT CZ 35 UK MTPL BG EE EL 30 IE LV RO SK LT 25 Malta’s Employment Tax Burden Compared to other EU Member States 45 IT SE BE 40 AT HU FR CZ FI Source: European Commission European Source: DE 35 SI DK EL PL NLEA16EU27 EE LT 30 ES SK LV LU BG PT RO 25 UK IE CY 20 MT Other EU Members States 2010 Budget France • Retirement bonuses will become taxable • Several household tax credits were reduced • Tax credits for home buyers significantly decreased Commission European Source: • From 2010, households and businesses will pay an additional tax on their consumption of oil, fuel oil, gas and coal • Removal of local business tax • Deficit: ‐8.2% • Economic Growth: 1.2% • Unemployment: 10.2% Other EU Members States 2010 Budget The Netherlands • Students grants for 2010 and 2011 have been frozen • Government cutting more than €140m in Education spend • No more travel allowance for 16 and 17 year‐olds in Commission European Source: secondary schools • Plans for social benefits reduction of social benefits • Spending on family doctors, hospitals and nursing homes will be reduced by almost €11 billion through plans to cut spending by every department by 20%, according to a letter from the Government to parliament • Deficit: ‐6.1% • Economic Growth: ‐0.8% • Unemployment: 5.4% Other EU Members States 2010 Budget Spain • VAT increase from 16% to 18% • €400 annual rebate for all taxpayers will be scrapped.