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RTÉ News
2 days ago
- Business
- RTÉ News
GDP shrank by 1% in Q2, preliminary CSO estimate shows
A preliminary estimate from the Central Statistics Office shows that gross domestic product fell 1% in the second quarter from the previous three months but was 12.5% higher than the same time a year ago. The Department of Finance prefers to rely on other data and caution against using GDP to gauge economic growth, as the latter is routinely distorted by foreign multinationals. But GDP is still used to calculate Ireland's share of activity across the euro zone. Irish GDP jumped 7.4% quarter-on-quarter in the first three months of the year and 20% year-on-year due to a surge in pharmaceutical exports to the US ahead of threatened tariffs, inflating the average growth rate across the euro zone. Today's preliminary results are subject to revisions in the Quarterly National Accounts release, which will be published in early September when additional data sources are available to the CSO.
Irish Times
2 days ago
- Business
- Irish Times
Spending on infrastructure makes sense, cutting VAT on hospitality is quite mad
Looking at the performance of the economy over the last 18 months, things look pretty good, as long as you aren't looking for somewhere to live. On to an already buoyant economy, last year's election budget ploughed in more money, equivalent to more than 1 per cent of national income. With full employment, this served to further drive up domestic demand, and also house prices. It hasn't made us much better off, even if it proved popular and garnered a few votes. As election budgets go, it could have been worse. The election budget of 1977 was the biggest culprit in the economic misery of the 1980s, and the election budget of 2007 pushed the economy and house prices to new heights, leaving it even further to fall in the ensuing financial crisis. By these standards last year's election splurge, while ill-conceived, was much less damaging. This year, with no election in sight, it should be time for wiser counsels to prevail in government. While we are seeing continuing growth in the economy, the Department of Finance provides a much more sombre assessment of what is to come due to US president Donald Trump 's wrecking ball. READ MORE Tariffs and a possible trade war would directly affect Ireland, with possibly more serious consequences stemming from the damage done to the wider European Union economy. While this downbeat assessment calls for fiscal caution, instead of heeding their own advice, the Government plans to increase expenditure next year by more than 7 per cent, while national income may rise by 5 per cent. This might be acceptable if they also planned a big increase in taxes , to avoid stimulating an already fully employed economy. However, without tax increases it will add to inflationary pressures. [ What did the summer economic statement really tell us about Budget 2026? Opens in new window ] The Government also, correctly, has highlighted the huge deficit in infrastructure in Ireland stemming from the economic success of the last decade. In countries such as Germany, Italy and Greece, more older people die each year, vacating their homes, than new young households are formed. As a result, these countries don't need a big increase in housing or in related infrastructure. In contrast, with our rapidly growing population, we need to invest in more housing, water and energy, as being provided now in the updated National Development Plan (NDP). [ We need to confront the reality that the housing shortage can't be solved Opens in new window ] While the Government has the money to spend on building more infrastructure, this will work only if a range of other complementary policies are implemented. Firstly, while spending money on infrastructure makes sense, in a fully employed economy we need to redirect resources from other sectors to building and construction. For example, the plan to cut VAT on catering and accommodation is quite mad. The latest data shows that that sector is booming. Instead we need to free up resources for new building by spending less in other economic sectors. In sectors that are already thriving, it could make more sense to raise taxes than to lower them, to encourage redirection of labour to our most urgent problem, housing . David McWilliams on how 'big incentives' to build could save Dublin city Listen | 36:51 The NDP sensibly provides funding to build new wires to link homes and businesses with electricity generation. There is also funding for a long overdue metro for Dublin , and to bring water from the Shannon to Dublin to tackle the knife-edge water supply in the capital. However, these projects will get under way only if the planning and regulatory systems are dramatically reformed. It has already taken five years for planners to consider a verdict on the metro. Countries such as Spain would have built the metro in that time, instead of merely scrutinising the plans. The North-South electricity interconnector was announced 20 years ago, while planning delays on both sides of the Border mean it will be 2032 before it finally happens. Once started, the actual construction will just take months to complete, not the decades spent in planning. The need to pipe water from the Shannon to Dublin was established over a decade ago, yet it could be many more years before it is delivered under the present planning system. In the 19th century, specific legislation was enacted to build our railway system. As Michael McDowell has suggested, a similar legislative approach should be taken today to developing key infrastructure. [ There is a way to unblock Ireland's infrastructural logjam Opens in new window ] We need to enact a specific legal mandate, in the overriding national interest, to drive forward critical projects and avoid the endless round of planning applications, appeals and judicial reviews. Had we done that for the metro, it would have been finished a decade ago. But unless the planning system is reformed, I'm unlikely during my lifetime to ride the metro or drink Shannon water from my tap.
Observer
2 days ago
- Business
- Observer
Rise in jobs in Ireland's financial services after Brexit.
The number of jobs in Ireland's financial sector has seen a major increase from 35,000 in 2015 to just over 60,000 now, an increase of almost 70 per cent, according to a consultation paper published by the Department of Finance. It credits Brexit with some of that increase, pointing out that the sector in Ireland has thrived since Britain voted to leave the European Union in 2016. 'Ireland is now home to many global financial giants, many of whom have chosen it as their EMEA (Europe, Middle East, Africa) head-quarters,' the paper says. 'Post Brexit, Ireland experienced a further influx of IFS (International Financial Services) firms relocating from the UK. Financial services is one of the largest sectors in the UK economy too. It employs 1.2 million people across the country. It is also one of the UK's most internationally facing sectors: the UK is the world's largest net exporter of financial services and the sector accounts for more than half of the UK's surplus in services export. The Department of Finance in Ireland concedes that the Brexit bounce is probably over, and the financial sector will have to look for other ways to develop in the face of mounting international competition for investment. 'The benefits from Brexit relocations, one of the drivers of growth in the sector in recent years, will likely be limited in the future,' the paper says. 'Competition from growing international financial services hubs, such as Singapore and Dubai, is increasing.' Among the other challenges are the green transition, which has led to both Ireland and the European Union making promises on climate and sustainability objectives, which the financial services sector will have to assist with, by channelling investment towards appropriate projects. Another challenge is to lure more household savings from bank accounts into 'productive investments'. The consultation process launched by the Department is to prepare a new 'Ireland for Finance' strategy to develop the international financial services sector. The strategy began in 1987 under the then Taoiseach (prime minister), Charles Haughey, acting on the advice of businessman Dermot Desmond. He introduced policy supports and tax breaks to attract IFS activity into Ireland, and the strategy was so successful that it gradually transformed the country into a globally important hub. The consultation paper says Ireland now hosts about 600 IFS companies, and is the sixth-largest exporter of financial services globally, and the third largest domicile for funds. 'Ireland's market share has continuously grown over decades, as specialisation and expertise in various areas has developed. Ireland is now home to some of the world's largest IFS companies in sub-sectors such as banking, funds, asset management, insurance and reinsurance, fintech, and aircraft leasing,' it says. Leveraging off the presence of global tech firms, the country has become a hub for payments firms, and a specialist hub for aircraft leasing, with over 60 per cent of the world's leased aircraft managed from Ireland. A report by Indecon last year on the impact of the funds and asset management industry concluded that the sector provided almost one billion euros in direct tax revenue in 2023 alone. The Programme for Government set a target of 9,000 new jobs in the IFS sector by 2030. The new 'Ireland for Finance' strategy will aim to meet that, but the Department is cautioning that in the current economic climate, keeping the jobs we have is a key consideration. A public consultation period will run until 19 September. Stakeholders are being asked for their views on how Ireland can expand the sector, but also to identify any barriers to competitiveness and growth.
The Journal
2 days ago
- Business
- The Journal
Jobseekers are avoiding part-time roles in fear of losing other social welfare
JOBSEEKERS ARE DETERRED from taking up part-time employment in case they lose out on other social welfare entitlements, a specialist expert group has told the government ahead of Budget 2026. In order to ensure unemployed people are motivated to get a job again in the future, the government has been told to increase means-tested social welfare allowance thresholds so that they are in line with the national minimum wage or a recipient's earnings. It comes as Fine Gael leader and Tánaiste Simon Harris floats the possibility that the jobseekers' allowance would be removed from the overall increases to social welfare, in favour of higher increases to pensioners. The Tax Strategy Group, an expert advisory panel at the Department of Finance, said this week that 'inconsistencies' have appeared in Ireland's social welfare system as it has evolved since the late 1800s. It explained, in its annual reports to government ahead of the budget this year, that jobseekers are disincentivised from picking up shifts in part-time roles in case they impact the specific thresholds of income which are disregarded from social welfare payments. A portion of a person's income is not taken into account when assessing how much they are entitled to from a social welfare payment. This means that you can earn a certain amount of money, without it affecting your entitlements. Advertisement In some cases, the threshold of income that is disregarded from the means test, which will later determine the value of the total payment, is surpassed when jobseekers take up part-time roles, leaving them with not enough money to rely on each week. It can also impact any other means-tested social welfare payments that they may be receiving, the tax experts' report said. 'This is a penal approach that acts to disincentive an unemployed person from taking up part-time work,' the report from the Tax Strategy Group said this year . It has recommended that a system should be agreed whereby the values of these thresholds increase annually, 'whether aligned with the National Minimum Wage or earnings', to make sure that jobseekers find work. It added that this change would avoid situations where a person's social welfare entitlements are impacted or reduced, and that it should be done in order to achieve Ireland's policy aims for social welfare. The report later questioned if there was indeed a 'policy rationale for creating this deviation' – in which case, the state should disregard the advice, it said. Speaking earlier this month, Tánaiste Harris said he was not convinced that dole increases should be in line with other social welfare payments, such as pensions and disability payments. 'When there are other supports out there for very many people who can't work for very many good reasons. That's my opinion. We'll thrash it out all that out at the time of budget,' he told reporters. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
The Journal
4 days ago
- Business
- The Journal
Election pledge by Micheál Martin to double Renters' Tax Credit will cost €160m
DOUBLING THE RENTERS' Tax Credit to €2,000, something Taoiseach Micheál Martin pledged to do before the general election, will cost €160 million, according an expert advisory panel at the Department of Finance. The Tax Strategy Group papers which advise the government prior to the government, sets out that increasing the tax credit would incur varying costs to the Exchequer depending on how much the credit is raised. In an interview with The Journal , prior to the election, Martin outlined some of his party's housing priorities, pledging to boost the Renters' Tax Credit to €2,000 per person. Currently, the credit amounts to €1,000 per person or €2,000 per couple claiming. Advertisement Promise to double credit 'at a minimum' Martin said that people needed to have some financial pressure alleviated and the tax credit would help, stating: At a minimum, we would like to double it in the next government. Fine Gael, in its election manifesto promised to increase Rent Tax Credit to €1,500 per renter or €3,000 per couple, to support tenants in managing expenses. In the programme for government, there is a commitment to progressively increase the Rent Tax Credit. Revenue estimates that increasing the credit by €100 for single people and €200 for jointly assessed couples would cost the Exchequer approximately €20 million annually, the newly published tax papers set out. A larger increase of €500 for single people and €1,000 for jointly assessed couples would cost €95 million annually, while doubling the value of the credit to €2,000 for single people and €4,000 for jointly assessed couples would cost €160 million, the review states. The Summer Economic Statement set out that this year's €9.4bn budget includes a €1.5bn tax package. Related Reads No protections against rising rents for students leaving private tenancies at end of year New rental regulations will allow landlords increase rents if previous tenant leaves voluntarily Rental prices rising at near 20-year high as Limerick rents shoot up towards Dublin levels The largest group of claimants of the tax credit are young adults between 21 and 30 years old, the tax experts state. This is followed by individuals aged between 31 and 40 years old. 'This indicates a strong uptake of the relief and likely a larger renting population in this cohort. 'The difference between the amount of credit claimed and the amount of credit used is higher for the younger cohort; the difference tends to decrease as the claimants' age increases. This is likely to reflect lower incomes and hence less tax paid in the younger cohorts,' the review reports. Majority who claim earn less than €40k More than half of the Renters' Tax Credit claimants have a gross income lower than €40,000, while claimants reporting a gross income larger than €100,000 account for 7% of all claimants. Claimants with lower gross incomes also show lower rates of credit used over the total amount claimed, with the report stating that this is most likely because they have not paid sufficient income tax to fully absorb the tax credit. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
