David W Higgins: If Ireland can remove all involvement with Israel, why wouldn't Israel do the same to us?
If Ireland can remove all involvement with Israel, why wouldn't it do the same to us?
The Trump trade war continues. The EU has joined China with a 90-day reprieve. A burst of dealmaking is unfolding behind the scenes. Exporters are continuing to count the fallout. Everyone has more questions than answers.
While chaos is to the fore, a less talked-about budget bill is progressing through US Congress. Section 899 of that bill has raised eyebrows. It allows the US to impose up to 20pc taxes on countries it deems to have unfairly taxed American companies. This could be levied on dividends or interest as they exit the US. It gives a new tool to Donald Trump.
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Irish Independent
20 minutes ago
- Irish Independent
VAT receipts up, but corporation tax has taken a hit
The amount of Value Added Tax (Vat) collected to the end of May was €11.4bn, up €0.6bn or 5.5pc on the same period in 2024, despite the turbulence caused by US president Donald Trump's tariffs. In May, a Vat-due month, some €3.5bn was collected, which was €0.1bn more than in the same month last year. Income tax receipts in May were €2.8bn, according to the latest Exchequer returns, which was up 3.6pc on the same month last year. On a cumulative basis, €14.5bn in income tax has been collected in the year so far, up €0.6bn or 4.5pc. This reflects a scenario of almost full employment. Total tax receipts of €38.2bn were collected to the end of May, up €3bn or 8.5pc. But when the windfall Apple tax revenues are taken out, the figure stood at €36.4bn, which was just €1.3bn or 3.6pc ahead. May is considered an important month for corporation tax revenues, and €2.5bn was collected, which was down €1.1bn, or just over 30pc, on the same month last year. Receipts in May 2024 were boosted by one-off factors, however. Overall, and excluding money from the Apple tax settlement, corporation tax this year stands at €5.7bn, which is €0.6bn or 9.4pc down on the same period in 2024. Orla Gavin, head of tax at KPMG, said: 'The dip in corporation tax receipts in May, down just over €1bn on May 2024, is unexpected, given the steady performance of corporation tax payments to date this year. 'While May is a significant month for corporate tax payments, the decline may be due to the concentrated nature of taxpayers rather than a general indication of business performance owing to global trade uncertainties. The key months of June and November will be crucial in assessing whether the government's corporation-tax forecasts for the year are achievable.' Paschal Donohoe, the minister for finance, also said the most notable feature of the Exchequer returns for May was in respect of corporation tax, which he agreed had seen a 'marked' drop year-on-year. 'While this reflects once-off factors last year, it nonetheless highlights the degree of concentration in the corporate tax base, wherein a small number of multinational firms can significantly impact on the overall tax yield,' he added. ADVERTISEMENT 'In a context of unprecedented uncertainty in the international economic landscape, this serves as a timely reminder of Ireland's exposure to changes in the global trading environment, and of the vital importance of adhering to a sensible and sustainable budgetary strategy.' Total gross voted expenditure in the first five months of the year amounted to just under €42bn, up just over 8pc on last year, but €37m behind profile. Overall, an Exchequer surplus of €4bn was recorded to the end of May. This compares to a surplus of €0.8bn last year, but the comparison is again distorted by the Apple tax settlement. Once that is taken out, the underlying surplus of €0.7bn is €0.1bn behind the same period last year. The Minister for Public Expenditure, Jack Chambers, said: 'We are seeing a significant increase in capital spending in particular, up by almost a third year on year. This underscores Government commitment to tackling infrastructure gaps in our economy and society. "I am currently undertaking a review of the National Development Plan to further target investment in the critical, growth enabling areas for the rest of the decade and will be bringing this review to Government next month.'
The Irish Sun
31 minutes ago
- The Irish Sun
Cash boost for thousands of Irish homeowners as big mortgage savings expected after ECB cut rates for 8th time this year
HOMEOWNERS are set for more savings after the European Central Bank cut interest rates today for the eighth time this year. Tracker mortgage holders will see their rates automatically cut from 2.25 per cent to two per cent, while also putting downward pressure on other rates. Advertisement 2 The European Central Bank cut interest rates again Credit: Alamy The move comes after it emerged economic growth surged by 9.7 per cent in the first part of 2025, ahead of the Gross Domestic Product (GDP) had been predicted to grow by just three per cent. As the US imposed global tariffs, exports to Total exports, equating to over €18bn, an increase of 9.4 per cent. Advertisement READ MORE IN MONEY However, domestic While personal spending on goods and services grew by just 0.6 per cent. Employees saw a 0.9 per cent rise in wages. Assistant Director General with responsibility for National Accounts & Price Statistics, Chris Sibley, said the growth was driven by a 'significant growth in exports of goods'. Advertisement Most read in Money He said: 'Overall, the multinational-dominated sector rose by 12.4 per cent in the quarter. 'There was continued growth in the domestic economy in Q1 2025 with Modified Domestic Demand (MDD) growing by 0.84 per cent in the quarter. Trump doubles steel and aluminium tariffs and threatens China and its 'shoddy' exports in latest trade war escalation 'This was reflected in personal spending increasing by 0.64 per cent and growth in wages of 0.94 per cent over the same period.' Economist at audit, tax and consulting firm RSM UK and RSM Ireland, Thomas Pugh, said there was a 'strong start' to 2025 but there are 'risks abound'. Advertisement 'RISKS & HEADWINDS AHEAD' He said: 'Ireland's domestic economy (on the MDD measure) managed to grow by a solid 0.8per cent . 'However, risks and headwinds are building. Good exports may fall back in Q2 and the pernicious impacts of uncertainty will weigh on consumer confidence and business investment, dragging down growth. 'Looking at GDP as a whole, the clear story was a 12.4 per cent surge in net-exports and a whopping 41.1 per cent increase in capital formation, almost certainly due to firms front-running the imposition of US tariffs in April.' 'STRONG CONSUMPTION' There was strong growth in consumer spending, government expenditure and domestic investment. Advertisement Pugh added: 'That suggests that strong wage growth and low inflation was feeding through into strong consumption at the start of the year. 'The obvious question now is to what extent the tariff turmoil unleashed by the US administration in April will have disrupted the economic environment.' Meanwhile, experts are predicting that this might be the last rate cut from the ECB for a while. PAUSE PREDICTION Some investors are already pricing in a pause in July, and some conservative policymakers have also advocated a break to give the ECB a chance to reassess how exceptional uncertainty and policy upheaval both at home and abroad will shift the outlook. Advertisement Following the Governing Council's decision to lower the three key ECB interest rates by 25 basis points, ECB President Christine Lagarde said they are determined to ensure that inflation stabilises sustainably at its two per cent medium-term target. She said: 'In current conditions of exceptional uncertainty, we will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. 'Our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data,the dynamics of underlying inflation and the strength of monetary policy transmission. "We are not pre-committing to a particular rate path.' Advertisement 2 Tracker mortgage holders will see their rates automatically cut from 2.25 per cent to two per cent Credit: Getty Images - Getty
Irish Times
31 minutes ago
- Irish Times
Trump's Taco trade is a major headache for ECB rate setters
The so-called 'Taco trade' has been a boon for a certain cohort of Wall Street investors but a headache for almost everyone else, businesses and policymakers in particular. The acronym – short for 'Trump Always Chickens Out' – refers to the US president's habit of making tariff threats, resulting in a drop in markets, before walking back on the threat (in response to market pressure), causing markets to rebound. It was coined after Trump's so-called 'Liberation Day' tariff announcement in April which triggered a major market wobble followed by a 90-day pause one week later, followed by a market rally. The impact of tariffs is one thing but Trump's increasingly erratic pronouncements and the general uncertainty surrounding US trade policy poses quite a different proposition, one that can't be planned for. READ MORE [ Irish exports surged ahead of Trump's 'liberation day' tariffs Opens in new window ] Precedent tells us that uncertainty stops consumers making big purchase decisions and stops businesses investing, hence economic forecasts are being pared back. But the uncertainty also, from the European Central Bank's (ECB) perspective, complicates the path for interest rates. There is lag between the monetary policy changes and the effect of these changes on the real economy (days, weeks, months, even years – it is still debated). So not knowing where consumers and businesses will be in six months makes rate setting something of a stab in the dark. If ECB policymakers keep rates at relatively restrictive levels and Europe is enveloped in a nasty trade war with the US, they will be caught out. Conversely, if the ECB lowers rates quickly in response to tariff threats and Brussels and Washington agree a trade deal, they will similarly be caught out, particularly with massive defence spending plans – in Germany and elsewhere – likely to add to inflationary pressure in the coming months. 'While the uncertainty surrounding trade policies is expected to weigh on business investment and exports, especially in the short term, rising government investment in defence and infrastructure will increasingly support growth over the medium term.' That is how the ECB characterised its current predicament in a statement accompanying its latest rate decision on Thursday. The central bank reduced its headline deposit rate by a further quarter point to 2 per cent, a move that had been seemingly locked in by the latest inflation data for the bloc, which put headline price growth at 1.9 per cent below the bank's target rate of 2 per cent. The ECB's latest rate reduction, the eighth in the current cycle, came with a fresh set of forecasts for the euro zone economy. The ECB now thinks inflation will be below target in 2026, at 1.6 per cent, with the economy expanding at a slower-than-expected rate of 1.1 per cent. Despite strong labour markets, rising real incomes and easier financing conditions, ECB president Christine Lagarde warned that risks to growth were still skewed to the downside. 'A further escalation in global trade tensions, and associated uncertainties, could lower euro area growth by dampening exports and dragging down investment and consumption,' she said. Most EU exports currently face a 10 per cent levy in the US, though that risks rising to 50 per cent in July if negotiations fail. The relationship between Washington and Beijing also remains uncertain even after both sides lowered their tariffs from prohibitive levels. Even Lagarde's tenure as head of the ECB is now subject to a downside risk. According to World Economic Forum (WEF) founder Klaus Schwab, arrangements for Lagarde to take over the organisation before her tenure at the ECB ends in 2027 are in train. Lagarde made something of a feeble attempt to scotch this speculation with an insistence that she was determined 'to deliver' on her mission and complete her term.
