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‘Many more challenges’ facing Irish economy – Chambers

By July 11, 2024No Comments

Minister for Finance Jack Chambers has pointed to “many more challenges facing our economy,” along with “threats” and “vulnerabilities present in our public finances”.

Following turbulence in recent years, he told the Oireachtas Committee on Budgetary Oversight that the “economy has weathered these shocks remarkably well and now appears to have entered a period of relative stability”.

Updating the committee on the Summer Economic Statement, he said: “The brightest spot in our economy is undoubtedly in our labour market.”

Furthermore, Inflation is expected to remain on a “sustainable trajectory over the coming years, averaging close to 2% this year and next”.

However, Minister Chambers again underlined an exposure “to a potential overreliance on corporation tax receipts”.

“Corporation tax is now €1.2bn ahead of target” but it consists of “an extremely narrow tax base”, with ten companies paying the majority of the tax.

“A sector-, firm- or even product specific shock could have a large impact on our public finances,” he added.

He emphasised “that even with increased expenditure we remain on track to run healthy budgetary surpluses over the medium term”.

No updated budget surplus numbers ‘beyond 2025’

Sinn Féin TD Pearse Doherty said it was “unacceptable” that the Department of Finance did not know what the budget surplus will be in the years 2026, 2027 and 2028.

Work on “an updated trajectory” is underway, Mr Chambers replied.

“It’s simply not unacceptable,” Mr Doherty said. He said that those figures have been provided every year since 2019.

He said that “this goes to the core issue of fairness in terms of democracy, and allowing opposition parties to be best equipped to put forward their platform” in an election.

During a sustained and heated exchange, Mr Chambers asked if the deputy was accusing him of politicising “certain figures”, and said he does “not accept” the “very serious charge” that “information is being hidden or witheld – it absolutely is not”.

Chief Economist with the Department of Finance John McCarthy was asked to clarify matters, and said that they “have not provided Government with updated numbers beyond 2025”.

This is because of the “many changes” since the Stability Programme Update was issued earlier in the year.

There has been a “massive change” in corporation tax receipts, he said.

Employment figures set to reach 2.8m in 2025 – Donohoe

Speaking at the committee, Minister for Public Expenditure Paschal Donohoe said: “Next year it is expected that almost 2.8m people will be in employment compared to just over 2.3m pre-pandemic”.

The “growth in employment has been accompanied by strong growth in the population that is well above previous estimates,” he said.

“The population is now approximately 180,000 people higher than anticipated back in 2021,” the minister noted, adding that this has helped to frame Budget 2025.

Minister Donohoe defended the Government’s performance on tackling inflation and insisted that it is maintaining this prudence in Budget 2025.

He said: “We avoided fuelling inflation too with our balanced approach, and we are confident that this expenditure and tax package proposed for the forthcoming budget will keep us on that path.”

Article Source – ‘Many more challenges’ facing Irish economy – Chambers – RTE

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