Summer Economic Statement Released

By Gemma Creagh - Last update


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Financial Announcement

Wondering about Ireland’s fiscal future? The Minister for Finance, Public Expenditure and Reform, Paschal Donohoe T.D. insists the economy is in good shape. Yesterday, Donohoe published the Government’s Summer Economic Statement (SES). This precursor to October’s budget is not only a fiscal plan, but political strategy for Fine Gael. The SES provides policy background for future discussions in the Dáil ahead of the National Economic Dialogue.

Summer Economic Statement at a glance

· Targeting a deficit of 0.1 per cent of GDP next year – or better
· This would allow for a budgetary package of €3.4 billion
· €2.6 billion has already been pre-committed (see Stability Programme Update)
· If this ‘fiscal space’ of €0.9 billion was included in Budget 2019, it would increase the deficit by an additional 0.3 per cent of GDP. This would mean Ireland misses the Medium Term Objective (MTO) target for 2019, breaching the fiscal rules
· Therefore the plan would be creating a rainy day fund from 2019 onwards, to be topped up with annual contributions of €500 million from the Exchequer

Response

Speaking at the launch, Minister Donohoe stressed how employment is close to its highest level ever. “This is a welcome development but as capacity constraints are increasingly becoming a feature of some sectors this, in turn, could lead to overheating of the economy. In this context, it is vital that Government policy does not add fuel to the fire but that we make sensible and prudent decisions now to secure our hard-won gains and ensure the continuation of sustainable future growth.”

This Government goal is clear: reducing public debt and working down the deficit. Whether this will play out as planned, and/or filter down to the average worker remains to be seen.

View the full statement online at www.finance.gov.ie



Gemma Creagh

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