Announcing his much-awaited summer economic statement, Mr Donohoe set out his stall for his first Budget as finance minister and it was very much a case of much ado about nothing.
The amount of extra money he will have to spend is so small it is barely of consequence.
While headline figures say he has an additional €1.5bn to spend, once previous commitments and the new public sector pay deal are covered, the new spending budget is no more than €330m to €350m.
Based on the confidence and supply deal with Fianna Fáil, that spending increases and tax cuts will be split on a two-to-one basis, the room for
manoeuvre is minuscule.
While Mr Donohoe gave little away as to how he will spend the additional money, the things he did reveal were the cause of slight concern.
Firstly, he confirmed he intends halving the intended rainy day fund from €3bn, or €1bn a year for three years, to €500m a year from 2019.
Secondly, he confirmed the Government’s target of reducing our debt-to-GDP ratio to 45% is being replaced by a target of 55%.
It was also confirmed that last year’s budget was in breach of the EU’s spending benchmark to the tune of €450m, higher than the €200m spoken of previously.
Mr Donohoe was forced to admit Budget 2018 will not breach the EU rules and will “broadly” be in balance, but for the first time, his comments sounded shaky.
Mr Donohoe’s document admitted the EU is forecasting a deviation from the benchmark in 2017, but he said the Government had questioned the legitimacy of the EU calculations.
Mr Donohoe also said the impact of Brexit will dent our economic growth by about 0.75%.
In isolation, all of these are small matters, but in combination they suggest justifiable cause for concern looking ahead. We are heading further into uncharted territory and Mr Donohoe’s remedy is to be more flagrant with the targets underpinning his numbers.
For the assembled media yesterday in the Department of Finance, it was a frustrating afternoon, as question after question was met with a refusal to answer or a deflection of sorts, with Mr Donohoe saying he would deal with those matters on budget day.
The opposition were, predictably, underwhelmed by the summer economic statement.
Former tánaiste Joan Burton said the statement was a “wasted opportunity”. She said the proposed increase in capital expenditure by €500m a year was not enough, and that the rainy day fund was the wrong approach at this time. She said the document had nothing to say on tax justice, nor what the Government’s priorities were on taxation.
Fianna Fáil’s Michael McGrath said he was disappointed by the watering down of the rainy day fund, but said he would still expect Mr Donohoe to stick to the 2:1 ratio in terms of spending increases and tax cuts.
Sinn Féin’s Pearse Doherty added to the chorus of discontent, calling for the proposed tax cuts to be axed and for the rainy day fund to be scrapped, with the money diverted into frontline services.
It is very much a question of not a lot done, a huge amount left to do.
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