There is by now little need to explain government neuroses around the ailing fiscal health of European states. Of particular concern are the financial shortfalls resulting from untaxed and undeclared economic activity.
A report today brings these fears home. Visa Europe estimates that while Ireland currently has the sixth lowest level of shadow economy indiscretion, it still accounts for €20 billion a year, or some 12 per cent of GDP.
Naturally “under the table” tricks or “nixers” thrive in recessionary times.
Visa refers to this black market menace as "a cash-based phenomenon across Europe" in its report The Shadow Economy in Europe, 2013 – Using Electronic Payment Systems to Combat the Shadow Economy . Its interest in the matter is referenced clearly in the title.
Here, undeclared activity costs the State €20.4 billion a year, it says (12.2 per cent of GDP), although this has reduced since 2012, at which stage the estimate was more in the order of €20.7 billion.
In the international context, the scale of the shadow economy in Europe ranges from 8 to 10 per cent of GDP in Switzerland, Austria, the Netherlands and the UK, up to nearly 30 per cent in Bulgaria, Croatia, Lithuania and Estonia.
“While we are currently ranked sixth lowest in terms of shadow activities in Europe, there is still much work to be done,” says Conor Langford, vice-president of Visa Europe. “We welcome the recent launch of Ireland’s national payments plan and other such market initiatives that drive collaborative concentrated efforts around electronic payments that will have a tremendous impact on the shadow economy in Ireland and could quickly reduce it by €2 billion.”
A cashless world is unlikely any time soon but that, ultimately, is the scenario that may offer deliverance from this economic underworld and one of which Visa would be an obvious beneficiary.
In this vein, Langford explains: “The shadow economy in Ireland has in fact reduced . . . The report predicts that a more targeted use of electronic payments would help reduce the shadow economy by up to a tenth, or the equivalent of €2 billion in Ireland.” Naturally.
