On the eve of the most important budget for years, we are way past the point of acknowledging that old aphorism that the squeakiest wheel always gets the most grease. All four wheels are groaning with every turn, there are holes in the bodywork, and the brakes are not working because of the energy crisis and concomitant inflation.
A major job is required to repair three mega-trends running through our economy: A housing crisis that seems set to become worse; an ageing population, with the associated healthcare and pension challenges, and a climate revolution that requires radical action and societal change.
Pre-budget conditioning has led to expectations that the overall package will be in the region of €10bn, of which 30% relates to cost of living, with the hope that this support can be reduced in future years as inflation is controlled. A range of departments is looking for increases and special-case assistance: Health, justice, social protection, education, transport.
Agriculture is facing increased difficulties in obtaining fertiliser and also rising energy costs attributable to the illegal invasion of Ukraine. Farmers must reduce emissions by 25% and deal with a new Common Agricultural Policy, while differing levels of support for new schemes that cover the environment, suckler beef, and sheep will emerge later this week.
Given that government spending will exceed €90bn, it remains to be seen what scope exists to replenish the proverbial rainy day fund, although this seems to be a sensible precaution, in the context of the unforeseen challenges of the past three years, caused by Covid-19 and Vladimir Putin.
The volatility of the housing rental market has been a headline issue for the past 12 months and it will be a huge surprise if action is not taken to stanch the exodus of private landlords. Housing charity Threshold has revealed that the number of tenancy termination notices, not all of them legal, has doubled so far in 2022. Threshold’s southern manager said landlords willing to sell their properties were getting a good price. A spokeswoman added: “Facing constant changes in legislation, many are choosing to leave the market. The Government needs to find ways to address the tax issue and encourage landlords to stay in the market, while also increasing the supply of private and social housing.”
Ultimately, this is a problem of supply and while there is a government commitment to deliver 18,000 new cost-rental homes between now and 2030, this does not speak to the current crisis.
Ministers Paschal Donohoe and Michael McGrath have been steadying influences amid the tribulations of recent years. As the markets open today, we will see the impact of the UK’s more cavalier policy, involving tax cuts and higher borrowing. It is an example unlikely to commend itself here.
This budget may not be decisive in the fortunes of political parties that do not face re-election until 2025, but it will be one that people remember. Citizens will be expecting a mark of serious intent to tackle both their short- and medium-term anxieties.