Brexit impact hits as growth predictions fall
Ministers negotiating next week’s budget however, are insisting that the reduced economic forecast because of the Brexit fallout will not impact on spending measures for 2017.
Pre-budget tax receipts announced yesterday show that the Government collected half a billion euro more so far this year. Tax receipts rose to €33.4bn, up 5.7%, as the exchequer took in €484m more than anticipated.
However, economists said the performance of the ‘big four’ tax heads was a “mixed bag”.
Over €4.1bn in corporation tax in the year to September or 18% more than had been expected was taken in.
However, income tax was below expectation, as were Vat receipts.
Commenting on the exchequer returns overall, Finance Minister Michael Noonan continued to signal that next week would not see a giveaway budget.
“We should guard this improvement and be prepared for external shocks so that we can all continue to enjoy the benefits of our recent hard work,” he said.
However, elsewhere, Department of Finance chief economist John McCarthy lowered expectations for the economy, telling an Oireachtas Committee that “the current outlook is characterised by considerable uncertainty, with the impact of Brexit still unfolding”.
Officials have reduced next year’s forecast by almost half a percentage point to 3.5%, while the economy is predicted to grow at 4.2% this year — less than forecast previously in the summer economic statement.
Year-on-year changes in the euro–sterling exchange rate, reduced future employment growth, and slow economies in the US and euro areas were mentioned.
Commenting on Brexit, which is to be triggered next spring, Mr McCarthy also said: “There is also the possibility that if the UK economy goes into recession, that would have an impact in lower trade and so forth.”
The International Monetary Fund yesterday also cut its growth forecast for Ireland.
Cabinet will tomorrow hold a pre-budget meeting as the final touches are ironed out between ministers, the Independent Alliance, and Fianna Fáil ahead of next Tuesday’s announcements.
Meanwhile, Taoiseach Enda Kenny and the Cabinet agreed to host all-island talks on Brexit next month.
Mr Kenny last night briefed opposition leaders about a judge-led inquiry into Nama’s Project Eagle, which will cost €10m and will be completed by 2017.
