Ibec launches Budget 2023 campaign
Ibec, the group that represents Irish business, has said that it is imperative that Budget 2023 provides a robust response to both the immediate inflationary competitiveness challenges and in meeting the long-term strategic issues we face as a society.
As the group launched its Budget 2023 submission to Government (see below), detailing suggested spending and tax measures of just under €2bn, it said that the undoubted current inflationary pressures must be matched by a focus on the crucial long-term investments necessary to enhance living standards, overall quality of life and economic resilience.
Ibec believes that there is a need for direct supports for those households and industries most exposed to spiralling energy costs. Fiscal policy must also be flexible over the winter and potentially into 2023 should a continued deterioration of the inflationary environment occur.
Speaking at the launch of the campaign, Ibec Head of National Policy and Chief Economist, Gerard Brady said: “Budget 2023 arrives at a crucial inflection point for the global economy. Catalysed by huge cost pressures and tightening of financial markets, we are facing significant global economic headwinds, with the era of record low interest rates, low inflation, and spare capacity ending.
“As a small open economy, shifts in the flow of capital through the global economy will have an outsized impact on the Irish growth model. Our members are already experiencing this through tighter capital markets and rapidly rising costs. The outlook for Irish business is marked by growing concern at rapid shifts in our competitive position. This underlines the importance of controlling what we can here at home in Budget 2023.
“In the short term, the focus of the business community will be on dealing with the impact of a rapid escalations in costs, particularly energy and labour costs. This must be supported by a significant immediate package of emergency energy supports under the new EU State Aid framework along with a package of Budget Day incentives for energy efficiency and low carbon investment in 2023. Government must also do much more to control and offset the policy related labour costs which are impacting business.”
Amongst the key asks detailed in Ibec’s Budget 2023 submission are:
• With inflation high and uncertainty rising, fiscal policy will need to continue to be flexible to volatile economic conditions throughout this year and next.
• Government policy in the labour market is loading significant cost pressure onto businesses, particularly SMEs. The most exposed businesses will need concrete support through this period of transition. This should take the shape of a time limited labour market transition rebate, funded from the National Training Fund (NTF) with a payment break element and a rebate for training, upskilling or productivity vouchers.
• We support the Government’s commitment to a continued increase in the level of the carbon tax. However, this must also be balanced by offsetting incentives for energy efficiency, the adoption of low carbon technologies and alternative energy sources. This includes significant resourcing of SEAI grant schemes, considering further super deductions for energy efficient investments, ‘greening’ our VAT rules and support schemes for micro and mini generation. Emergency supports to help offset spiralling business energy costs are urgently needed.
• Irish companies of all sizes have the potential to compete in an economy driven by mobile skills and intangible assets, but for this to happen we are calling for crucial investments in education, skills, childcare, research and innovation and digital of over €400 million in 2023.
• Ireland must continue to invest in the competitiveness and productivity of the sectors worst impacted by Covid such as the Experience Economy, with investments in town centres and skills and appropriate use of the €1 billion Brexit Adjustment Reserve to support investment, upskilling and competitiveness in the worst exposed sectors.