Ibec, the group that represents Irish business, has welcomed new measures in the Budget aimed at improving the long-term sustainability of the economy following a significant increase in capital spending of €1.5 billion and the elimination of the Budget deficit.
Ibec CEO Danny McCoy stated: “For some time, Ibec has argued that some of the additional resources being created by a growing economy should be allocated for long-term productive investment uses. The increase in capital spending captures that spirit and shows that Government is listening to the concerns of business and citizens about quality of life issues.
“Additional supports for indigenous business are also important given the uncertainty sectors exposed to Brexit face. It is vital now that both the capital plan and Brexit mitigation supports are implemented without haste. Nevertheless, competitiveness pressures will be increased for some sectors as a result of changes made today with much of €700 million in tax increases falling on business.
“After a decade of running Budget deficits, we welcome a return to surplus and a balancing of the books. We note, however, that too much of the spending increases announced remain focused on unproductive areas rather than those that support long-term growth and competitiveness such as higher education. Looking forward, we must ensure current expenditure increases are not contingent on surging corporation tax revenues which may not be sustained in the future.”
Budget 2019 highlights:
- · An increase in Capital Investment of almost €1.5 billion will underpin quality of life, including significant increases in funding for housing.
- Ibec Budget 2019 Analysis.pdf - 344 Kbytes
· Improvements to the Key Employee Engagement Programme (KEEP) which will help small firms attract and retain key employees.
· A total of €37 million in total for Brexit response across all Departments including funding for the enterprise agencies Brexit response, the ‘future growth loan scheme’ and supports for Agri-Food companies. This is a positive start but will not be enough in the context of a hard Brexit.
· The significant increase in the rate of VAT for hospitality of 4.5% will be a challenge for a sector where margins are very low and will inevitably increase competitiveness pressures.
· An increase of €750 in the income tax standard rate band for all earners and a modest reduction in the marginal rate by 0.25% which will help take some pressure off the labour market.
· Accelerated Capital Allowances for Gas-Propelled Vehicles and Refuelling Equipment which will help the goods fleet undertake a low-carbon transition.
· A mechanism to draw down €300 million of the existing surplus in the National Training Fund between 2020 and 2024 to support the higher education sector along with €21mn for the sector to meet demographic trends in 2019. This is to be welcomed but will fall well short of funding needs for the sector.