Budget 2021 analysis
Budget 2021 has delivered as was expected and required. Indeed, it is unusual to have both a consensus on what needed to be done and to have the money to deliver it. We are for sure living in extraordinary times. The scale of the package and the supports announced to help business deal with the uncertainties raised by both Covid and Brexit are to be commended.
The mistakes of past crisis budgets appear to have been avoided by a commitment to enhance capital expenditure to tackle the structural challenges of housing, carbon transitions and the All Island economy. Today’s announcement of a planned increase in capital spending is a positive move given the scale of the deficit in both social and physical infrastructure. This investment will be central to our collective efforts in enabling the economy to resurge more competitively and sustainably.
Businesses are continuing to engage in contingency planning for a hard Brexit so while there wasn’t specific details, the pledge by Government towards the Brexit Recovery Fund is very welcome and Ibec looks forward to working with Government on it. It is imperative that we see now these financial supports put to work in the areas of the economy most exposed to the economic fallout of Brexit. We have highlighted in recent months the devastating impact that Covid has, and continues to play on the domestic experience economy, encompassing the tourism, entertainment, culture and hospitality sector and its diverse supply chain. In this regard, the introduction of new cash flow support schemes for firms closed down due to the health measures are essential.
Today’s announcement of a reduction in VAT along with extension of the Employer Wage Subsidy Scheme is an important first step in getting Ireland’s experience economy back on its own feet and will undoubtedly provide a lifeline to many businesses in the sector struggling to stay afloat. Welcome also are the measures announced today to get people back to work to attempt to avoid the scarring effects of persistent unemployment by the increased supports and new labour market activation programmes to support jobseekers.
In summary, a sensible budgetary approach given the competing challenges and Ibec’s budgetary assessment is attached below.