Budget 2017: Public to be €5 better off per week
In its first spending plan since the UK voted to pull out of the EU, the Government revealed it is diverting hundreds of millions into future-proofing the country against the fallout.
The war-chest funding left Finance Minister Michael Noonan with less to give away in a €1.3bn package, with three times as much on spending as tax cuts.
Despite the economy bouncing back from a historic crash to outperform every other country in the EU, Mr Noonan said the country is facing into new, unknown risks with the impending Brexit.
“We must put in place economic shock absorbers to enable us to deploy resources to reduce or eliminate the impact of future economic shocks,” he said.
This includes massive funding to government departments and State agencies charged with protecting overseas trade and diplomacy.
Tourism, food and agricultural businesses, which rely heavily on cross-channel trade, were handed breaks.
Pensioners, parents and first time home-buyers were also given some help among the modest €300m tax cuts and €1bn spending increases.
Key measures include:
- Further cuts to the three lowest rates of the controversial austerity levy, the universal social charge, of 0.5%, which works out at around €5m more to spend for average earners.
- A €5 a-week rise in the state pension and all other weekly social welfare payments — including the carer’s allowance, disability allowance and jobseeker’s benefit and allowance.
- An affordable childcare scheme with both means-tested subsidies for children aged between six months and 15 years and universal subsidies for all children aged six months to three years, to be introduced next September.
- A new help-to-buy scheme for first-time house buyers struggling to get on the property ladder, giving a 5% rebate of up to €20,000 over four years on new houses.
- 50c added to cigarettes.
- €1bn set aside every year from 2018 for a “rainy day fund”.
- Freeze on the reduced tourism and hospitality Vat rate of 9%.
- A sugar tax on soft drinks to be introduced alongside the UK in April 2018.
- A two-year extension to a home renovation tax-break scheme credited with kick-starting much of the ailing construction industry.
A public sector recruitment campaign, after a years-long freeze, will also see almost 4,500 more gardaí, nurses and teachers employed from next year.
Mr Noonan said the economic growth forecast for next year has been cut to 3.5% as a result of Brexit.
But he insisted the economy is in good shape, growing strongly and should continue to grow over the coming years.
“Whatever the final settlement, what we know with certainty is that Brexit has increased risk to the economy and, as well as introducing specific measures to assist particular sectors of the economy, we must also put in place safety nets to protect us against future economic shocks,” he said.
Meanwhile, the British government has said maintaining the soft border on the island of Ireland will be a “red line” in the UK’s Brexit negotiations with Europe.
Robin Walker, British parliamentary under secretary of state at the Department for Exiting the European Union, said the return of physical barriers between north and south would be unacceptable.
Mr Walker was appearing before the House of Lords European Union Select Committee with Northern Ireland Secretary James Brokenshire to discuss the Irish dimension of the Brexit process.
He said: “There are very few areas where we have set out very clear red lines ahead of negotiations and this is one of them where we have been clear.
“This is so important that we want to put it right up front and we want to recognise that actually returning to the hard borders of the past wouldn’t be an acceptable solution.”
Northern Ireland Secretary James Brokenshire highlighted the importance of Ireland remaining outside of the Schengen area that operates in the rest of the EU, meaning travellers still had to show passports at border controls.
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