Latest news with #SummerEconomicStatement
Irish Independent
02-08-2025
- Business
- Irish Independent
The Irish Independent's View: Prudence, rather than largesse, makes most economic sense for Ireland right now
As August begins, we have already seen so many budgetary kites take flight to tell us the making of the next year's budget starts earlier each year. Right now, Ireland is a rich nation and its people have expectations that accord with that. But in a Trumpian discordant world, that situation could change rapidly, as we found to our cost in 2008 when we entered what former finance minister Michael Noonan later called 'a lost decade'. Ireland's small, open economic model leaves us susceptible to swift boom-and-bust switches. In early October, we will learn the 2026 financial plans of 'Mr Prudence' himself, Finance Minister Paschal Donohoe. Many of us believe we deserve more goodies, but this is more a time for caution. If tough global economic times hit soon, we will be in a better position than we were in 2008, but the atypical budget surplus, which contrasts with our European neighbours, can only cushion so much. Ireland cannot be an economic outlier forever. We are reminded that the days of the early 2000s, when taoiseach Bertie Ahern declaimed that the 'boom just got boomier', presaged tough economic times. The impact of Donald Trump's tariffs may diminish the resources available for such largesse Mr Donohoe and his colleagues insist that one-off budget payments, like electricity bill grants, are not going to happen next year, but closer analysis suggests the Government's dilemma is that voters will notice the difference if they do not happen again. This is particularly true for households with children, who benefited from two double welfare payments. For a single worker on €50,000 last year, the budget measures delivered about €860 extra per year. When you add the two energy credits amounting to €250, you find it was a nice bonus that will be missed. The impact of Donald Trump's tariffs may diminish the resources available for such largesse, which should at all events be targeted, rather than blanket, measures. It may also provide some political cover for a more prudent approach to public spending. Last month's Summer Economic Statement indicated that there would be scope for a tax package of about €1.5bn, but a substantial part of that would be taken up by the pledged hospitality Vat rate cut to 9pc. Put this alongside keeping the lower Vat rate on household energy bills and you are suddenly over €1bn for a full year. Yet voters want income tax cuts, which are key to politicians' re-election, assuming there is available cash. Then there is the demand for welfare increases averaging €12 a week last year. All things considered, the Budget 2026 will prove more challenging than in the years of austerity when cutbacks virtually wrote themselves.
Irish Times
29-07-2025
- Business
- Irish Times
The Irish Times view on Ireland's response to tariffs: there is a need for strategic thinking
The outline trade agreement between the EU and the US, provided it holds, removes some immediate economic risk for Ireland. But as well as the initial response, it also underlines the line for longer-term strategic thinking about the Irish economy. In the short term, there are calls for supports for Irish businesses exporting to the US to deal with the additional cost. Care is needed here. Companies need assistance to look for new markets. And the Government also needs to examine other ways it can improve their competitiveness in the short term. However, the State cannot provide an ongoing subsidy for businesses to help them to sell to the US at tariff levels that are likely to be in place for some time. Companies can be helped to adjust to the new reality, but there is no point in State support for exports that are no longer economic. Over the coming months, the Government also needs to reexamine its budget sums. As it appears a full-scale trade war can be avoided, the assumptions made in drawing up the Summer Economic Statement, the key pre-budget document published last week, may need to be tweaked rather than torn up. A lot will depend on the details of how different sectors will be affected. READ MORE Ireland must also focus on the longer term. Ireland's economic model has been based in large part on attracting foreign direct investment (FDI) from the US and acting as a bridge between the American and European markets. Of course the State needs to do what it can to protect this and to hope that the framework trade deal is a sign of somewhat calmer times. However, Donald Trump remains determined to attract multinationals in sectors such as pharmaceuticals back to manufacture in the US. And, more fundamentally, the era of relentless globalisation overseen by the World Trade Organisation is over, even if what replaces it is far from clear. And so it is incumbent on Ireland to spread its bets – to diversify its export markets and to work harder to develop indigenous industry. These are both long-term projects and new approaches cannot transform the economy overnight. However, Ireland has focused in policy terms on measures to attract FDI. While domestic firms are supported , too, they often take second place in terms of the allocation of resources and policy attention. This needs to change. Improving the environment for both FDI and indigenous investment also requires vital upgrading of key infrastructure and also human capital – the skills and abilities of the workforce. These areas have been given insufficient attention for some years now – and the price has become clear. The Government's new strategy for competitiveness, promised in the autumn, needs to take a serious view of these issues. It can not be a rehash of current policy.
Irish Examiner
29-07-2025
- Business
- Irish Examiner
Central Bank governor: US-EU trade deal will 'dampen' growth
The US imposition of 15% tariffs on EU goods will 'dampen economic growth' although it will be partially offset by 'reducing uncertainty' and the likelihood of a more damaging trade war that has dominated the economic environment since the start of the year, Central Bank of Ireland governor Gabriel Makhlouf has said. On Sunday, the EU and US agreed the framework of a trade deal which will see tariffs of 15% placed on imports from the bloc to the US. Writing in a blog post, Mr Makhlouf said there was insufficient detail to provide a considered analysis of the deal but these tariffs will require a mix of absorption by firms, which means reducing their profits, or increasing the cost of these goods for US consumers. 'Overall, compared to six months ago, US tariffs of 15% on EU goods will dampen economic growth, although it will be partially offset by reducing uncertainty and the likelihood of a more damaging trade war that has dominated the economic environment since the start of the year,' he said. However, Mr Makhlouf said he would refrain from commenting further on the deal given the 'unpredictability that has been such an obvious feature of US Administration policy over the last six months', and the "fact that details matter'. Last week, Mr Makhlouf, and his colleagues on the ECB Governing Council, decided to keep interest rates where they are for the time being. On this, he said 'inflation was on track to stabilise at our 2% target in the medium term'. On the inflation picture in Ireland, Mr Makhlouf said the Irish economy and public finances have 'entered this period of heightened uncertainty from a strong position but there are also underlying vulnerabilities that need to be managed carefully'. Given the publication of the National Development Plan as well as the Summer Economic Statement last week, Mr Makhlouf said fiscal policy has to 'strike a balance between delivering on the necessary rise in public capital investment in the coming years' and 'current spending demands that seek to maintain or enhance existing levels of public services'. On the interest rate decision from last week, Mr Makhlouf said he believes they've reached a point in the easing cycle 'where we can wait and see whether the data and evidence indicates the need for a change in our monetary policy stance'. 'We are not committing to a particular rate path, and will continue to take account of new information when it arrives,' he said. The next ECB meeting is in September.
The Journal
28-07-2025
- Business
- The Journal
'No handouts': Taoiseach rules out supports for businesses impacted by US tariffs
TAOISEACH MICHÉAL MARTIN has ruled out Brexit-style government supports for businesses impacted by Trump's tariffs, arguing that the government cannot take a 'handout approach'. Speaking at a press conference this afternoon, the Taoiseach said 'this is not Brexit' when asked about the possibility of supports being introduced. 'I would caution in terms of just creating funds in themselves. More importantly, we have to take decisions now that would create the opportunity or the landscape for companies to grow and to develop strongly,' the Taoiseach said. He added: 'It has to be a strategic approach, not a handout approach'. Responding to his comments, IBEC boss Danny McCoy said he was 'surprised' by what the Taoiseach had to say. He argued to that there should be supports put in place to help the businesses worst impacted. 'There will be some businesses that will be disproportionately affected by 15% [tariffs]. These will be companies that have very low margins, and depend in the short term on the United States,' McCoy said. He added: 'There will be hard cases, there will be people who lose their jobs with 15% tariffs.' The Taoiseach said the agreement between the EU and US avoided a 'damaging trade war' but added: 'Nobody is welcoming tariffs with open arms.' Advertisement He took the view that the agreement acts as a wider framework for how trade will operate, but said the finer details for each sector will have to be ironed out in the coming days and weeks. 'There is much to be negotiated in the aftermath of this framework agreement, in terms of detailed almost, in some sectors, product-by-product negotiations,' the Taoiseach said. 'It's important to say that Europe never sought tariffs, or never sought to impose tariffs, and fundamentally, we are against tariffs: we believe in an open trading economy,' he added. 'In essence, we have avoided a trade conflict here which would have been ruinous, which would have been very damaging to our economy, and to jobs in particular. 'The challenge now for Europe is to work on its own inefficiencies, to reduce barriers within the single market, to press ahead more ambitiously and more proactively on trade diversification and trade deals with other countries that would facilitate that market diversification that is required.' Budget Asked what impact the tariffs will have on the forthcoming Budget, the Taoiseach said: 'It's difficult at this early stage to calculate the impact of these tariffs in terms of government revenues, or indeed in terms of the prospects for 2026, so we would do further analysis of that.' Last week, the government published its Summer Economic Statement, a document that sets out the spending and tax parameters ahead of the Budget. The document was based on a zero tariff scenario. Following the agreement of the US trade deal yesterday, there have been calls from Opposition TDs for the government to publish an updated Summer Economic Statement which accounts for the 15% tariffs. Finance Minister Paschal Donohoe said this afternoon that the government would not do so. 'The Department of Finance will publish updated macroeconomic and fiscal forecasts alongside Budget 2026, which will take into account the impact of the updated US-EU tariff arrangements,' he said. 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
Extra.ie
28-07-2025
- Business
- Extra.ie
Plan to cut VAT on hospitality sparks ferocious row between ministers
A spat between the Coalition parties over Fine Gael plans to cut VAT on hospitality to 9% has developed into a 'a ferocious row'. Simmering tensions about where budgetary cuts will land this autumn came to the fore last week between Fianna Fáil and Fine Gael over the issue of VAT cuts. After years of record spending increases, the review prior to the Summer Economic Statement came as a shock to ministers. Senior Fianna Fáil Minister of State Niall Collins. Pic: Gareth Chaney/Collins Photos In an extraordinary attack on the proposal, which would devour two thirds of the money allocated to tax cuts, the senior Fianna Fáil Minister of State Niall Collins said luxury and five-star hotels benefiting from a universal rate reduction to 9% would sit 'very, very uncomfortably with me'. However, Enterprise Minister Peter Burke has doubled down in his determination to see the €1billion cut through. He told 'The reduction on VAT is a promise we made to the hospitality sector in good faith. I am fully committed to its delivery as it is core and central to sustaining the 228,000 jobs in that sector, many of which are in regional locations. Enterprise Minister Peter Burke. Pic: Sam Boal/Collins Photos 'The tourism sector is a €9billion industry and one which I am focused on supporting particularly with our new tourism strategy which will be published in September.' But one Fianna Fáil minister said of the proposal: 'Fine Gael once again appear to be forgetting they are the junior partners. They do not decide tax policy and they certainly are not going to be allowed to create a scenario where the public will be furious over a measure that will only benefit a few coffee shops.' Tánaiste Simon Harris, Taoiseach Micheál Martin and Sean Canney, Independent TD for Galway East, speaking at a press conference for the launch of the Government's Summer Economic Statement and the National Development Plan for the next five years. Pic: Niall Carson/PA Wire Responding to Fine Gael plans to front-load the cuts during Micheál Martin's term as Taoiseach, one Fianna Fáil senior figure warned: '(FG leader) Simon Harris may want to be the new Bertie Ahern but he won't do it at our expense.' In a further indication of the new levels of tension surrounding expenditure, a number of legal challenges are being prepared by representative groups in the education sector should the Coalition fail to adequately fund schools. One education sector source said: 'There is trouble and underspending across the board, from primary education to third level. Serious trouble is coming down the tracks if ministers don't perform. 'We don't do press releases or complaints on the Order of Business. We are going to hold the Government to account over their legal responsibilities and we are prepared to take the legal route to defend the fiscal integrity of schools and the State's legal obligations to deliver appropriate facilities for children.' Taoiseach Micheál Martin. Pic: Sasko Lazarov/ The proposed challenges will increase concerns within the Government that it faces a destabilising summer of internal discontent over fears that Ireland faces its first austerity budget in a decade. One senior Government source said: 'Paschal [Donohoe] and Jack [Chambers] are engaged in a great act in expectation management. There is a great tidying-up process: all the cycle lanes, all that green stuff, we are not wasting that money.' Another senior Government figure added: 'The budget will be factually expansionary, look at the figures. We are, however, laying down the marker in the Summer Economic Statement to stop runaway stories.' However, Cian O'Callaghan, Social Democrats acting leader and finance spokesman said: 'It is clear that after the big giveaway pre-election budgets, citizens are facing difficult times. Cian O'Callaghan, Social Democrats acting leader and finance spokesman. Pic: Gareth Chaney/Collins Photos 'The Government can spin all they want about returning to normality. The truth though is that people experiencing the frontline of the cost-of-living crisis are and will experience the very real return of austerity budgeting.' Despite attempts by Government ministers to calm their TDs, unease remains high within the Government ranks. One Government source said: 'There are billions of one-off payments facing the axe and it is not going to be pretty. 'Look at James Lawless, he let the cat out of the bag too early on third level registration charges and he hasn't been seen since, he has disappeared.' However, a Fine Gael minister said: 'There's no great plot against Fianna Fáil, it is simple logic. When it comes to cutting, do you want to be unpopular now or would you prefer to be unpopular in five years' time. Our friends need to calm down.' Minister of State James Lawless. Pic: Sasko Lazarov/ The pre-budget negotiations could be a chance for Mr Chambers to put himself in position for a future leadership bid. A FF source said: 'There may be a bit of leadership-building going on with Jack [Chambers] as well. At some stage Micheál has to go and let's face it, at 64 he is nearer the end than the beginning.' Another Fine Gael source noted of 34-year-old Mr Chambers: 'He hasn't made too many friends in Fine Gael going around the place being led by the nose by his officials. Even the Tánaiste had to battle for Defence spending.' Unease is also growing within Fianna Fáil with sources speculating that succession factors may be at play when it comes to the vigour with which Mr Chambers is going about his task. The source added: 'There is a bit of an invisible leadership competition building up between Jack and Jim O'Callaghan. Big Jim is going very well at the moment so Jack may be trying to out-do him by generating a reputation as a great reformer of the public finances.'
