Irish Budget 2020 - A Cicero Group overview October 2019
Budget 2020 was presented in the context of a no-deal Brexit as per the Irish government’s assumption. This would mean a slower pace of economic growth in Ireland going forward.
Brexit Paschal Donohoe’s ‘Brexit Budget’ was never going to be ‘a something for everyone in the audience’ budget. That much had been clear for weeks as he and other government figures repeatedly dampened expectations, warning of the need for fiscal caution as we brace for a potential Hard Brexit. The headline figures confirmed this, with no increase in pensions or changes in PAYE brackets, among other gaping absences which would normally be uncharacteristic from an Irish government in fiscal surplus. Nonetheless, these measures will not be enough to keep the state out of the red if Boris Johnson does find a way around the Benn Act, with a 0.6% deficit predicted for 2020 if this does occur. Donohoe’s repeated use of the term ‘targeted’ gives some indication of the thought process that inspired today’s budget, with the overwhelming concern being towards ensuring that those specific areas of the economy most at risk from No Deal are not totally wiped out. The sentiment of the day has been a concern for businesses (especially Irish SMEs) that are ‘vulnerable but viable’, and which will require huge state support if they are to weather a no deal storm. The government’s €1.2 billion package (excluding any EU funding) includes €650 million to be ring fenced for the most vulnerable sectors – agribusiness, tourism etc – and will also see significant increases in funding for the Department of Business, Enterprise, and Innovation, as well as the economic agencies Enterprise Ireland and IDA Ireland.
Business Whilst the headline tax rates most relevant to business (e.g. corporation tax, PRSI) have remained largely unchanged, a number of schemes designed to incentivise the growth of the indigenous SME sector have received some alteration. The Employment Investment Incentive Scheme (EII) will now allow for tax incentives to be claimed in the first year,