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Eamonn Farrell/Photocall Ireland

"Patent cliff" saw Irish economy shrink by 0.3% last year

IBEC says that the figures are “puzzling”, but Michael Noonan isn’t worried.

THE IRISH ECONOMY shrank by 0.3% last year, as profits declined at a number of major pharmaceutical companies.

The latest CSO Quarterly National Account figures show that GDP fell by 0.3% last year, though these figures are preliminary and will be revised.

The so-called “patent cliff” is largely attributed to the fall, as a number of major pharmaceutical companies saw patents on big brands expire. On top of that, consumer spending dropped by 1.1%.

There was good news, however, for the agriculture, forestries and fishing, other services and construction sectors, with construction growing by 10.6%.

The distribution, transport, software and communications sectors fell by 2.5%, and public administration and defence by 4.6%.

The news comes despite a growth in the jobs market, something that employers group Ibec says is “puzzling”. Finance Minister Michael Noonan said that labour market indicators remain the priority.

“By contrast, labour market conditions are encouraging. Employment data is a reliable indicator of underlying developments in the economy and figures released a fortnight ago show employment growth of 3.3 per cent year-on-year in the fourth quarter of 2013.”

Ibec’s Head of Policy and Chief Economist, Fergal O’Brien said:

“It is a bit of a puzzle that the GDP numbers are so disappointing at a time when economic recovery is clearly taking hold. The Q4 data doesn’t fit with either the 60,000 jobs growth number last year, or the strong improvement in business and consumer confidence. The pharma patent cliff is a significant factor in the export data, but it was particularly disappointing to see that the consumer spending numbers were so weak.”

Read: Ouch, my wallet: Prices went up by 0.5 per cent last month alone

Read: Sold: NTMA sells €1 billion worth of Irish government debt

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19 Comments
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    Mute Karl
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    Mar 13th 2014, 1:00 PM

    It’s a bit rich that IBEC are saying that the reduction in consumer spending is disappointing when they are doing everything in their power to reduce drastically the wages and conditions in all employment sectors and strongly lobbying government to do the same in the public sector . Their hypocrisy is nauseating .

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    Mute Chris Treacy
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    Mar 13th 2014, 10:07 PM

    Karl is that a 350 powervalve????

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    Mute David Thomas
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    Mar 13th 2014, 1:01 PM

    The unemployment figures are better because of emigration,scambridge and gateway. I hope our esteemed business leaders read this. They can stop being so puzzled!

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    Mute Ignoreland
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    Mar 13th 2014, 1:24 PM

    No, that would make the unemployment figures better.

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    Mute Paul Roche
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    Mar 13th 2014, 2:12 PM

    Busy day in PR world Ignoreland?
    The article mentions 60,000…

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    Mute Ignoreland
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    Mar 13th 2014, 4:11 PM

    Absolutely no idea what you’re on about, Paul. Emigration can drastically massage the UNEMPLOYMENT figures not the EMPLOYMENT figures which the article talks about being improved.

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    Mute Bob MacBob
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    Mar 13th 2014, 4:47 PM

    David Thomas – what will it take to convince you, and anyone else who thinks things are not getting better, that things are getting better?

    And I’m not talking about your life – I’m talking about the economy as a whole.

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    Mute Paul Roche
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    Mar 13th 2014, 5:18 PM

    The EMPLOYMENT figures are increased by moving people via scambridge and gateway from UNEMPLOYMENT into EMPLOYMENT.

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    Mute Vince O'Shea
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    Mar 13th 2014, 10:59 PM

    David is right, the opposition are deluded, are comfortable etc. When you’re in a job and happy with your wage, affording this and that, one does not seem to see elsewhere = all is grand etc etc.

    BS and this story proves. On the other story “Prices went up by 0.5 per cent last month alone”

    Since when has a wage gone up? Its 10 years now, time to put the greedy poor mouths to bed.
    Businesses here have seen the most profits over the the entire EU, all during the recession. I wonder why?

    BS

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    Mute Silent Majority
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    Mar 13th 2014, 1:08 PM

    This would be a worrying development if our GDP was actually relevant! Realistically, the patent cliff hasn’t impacted the Irish economy with any real significance – the only potential impact would be pharma profits remaining low in the medium term resulting in some job losses, but this appears unlikely at present.
    If this impacts anyone, it is the US economy. It is to there that profits from patented products are repatriated. Precious little tax is even paid on profits from those products here.
    Why do we continuously insist on quoting GDP figures as the primary measure of our economy? Investors and people who actually make decisions that could impact our economy are not, and never will be, fooled by silly little parlour tricks like this.

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    Mute Neil Murphy
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    Mar 13th 2014, 1:31 PM

    Better measure is GNP which is up 3.4%

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    Mute Silent Majority
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    Mar 13th 2014, 1:42 PM

    Dead right Neil, so things genuinely are improving. Problem is, if this were to be publicised too much, then it would serve as an admission that GNP is the primary measure of our economy, and therefore debt/GNP ratios and not debt/GDP ratios are the truly accurate measure of our tax burden.
    Oh what a tangled web we weave when first we practice to deceive!

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    Mute Jurgen Remak
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    Mar 13th 2014, 1:58 PM

    Absolutely correct Silent and Neil, the real domicile nations of corporations are impacted more. Irish GDP is enormously skewed by these corporates and therefore cannot be relied upon to accurately gauge the Irish economy as a whole.

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    Mute Begrudgy
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    Mar 13th 2014, 12:59 PM

    Has the property tax been included in these consumer spending figures ?

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    Mute Dermot O Dwyer
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    Mar 13th 2014, 1:00 PM

    A Madman called Patient Cliff has just confirmed that the Findings in this article are infacta right…….

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    Mute Dermot O'Reilly
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    Mar 13th 2014, 11:01 PM

    The “spin ” from Government is unreal!

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    Mute Shawn Rahoon
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    Mar 13th 2014, 1:27 PM

    Are they crosses in the picture?

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    Mute Rachel Owens
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    Mar 13th 2014, 11:47 PM

    No mention of black market hugely damaging legitimate companies. This is real factor stopping recovery and growth

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    Mute William Martin Murphy
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    Mar 13th 2014, 10:21 PM

    I’ll give anyone a job, thruppence hapenny a day, half day off for Christmas, transport to the workhouse when you get lame, all the benefits, I’m back after 100 years and you will bow before me

    4
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