Ibec welcomes Budget 2024's investment ambition
Ibec, the group representing Irish businesses, welcomes the Government’s investment ambition set out in Budget 2024, particularly the establishment of the National Infrastructure, Climate and Nature Fund. However, it cautions that the success of this ambition will be measured by the effectiveness of its implementation. While Ibec welcomes the introduction of the SMEs support package, we await the specific details. However, Ibec views this support as critical to helping businesses navigate significant labour cost increases imposed by Government.
In welcoming the introduction of the National Infrastructure, Climate and Nature Fund, which Ibec has been strongly advocating for, it believes the fund of up to €14bn has the potential to significantly enhance social, economic, and environmental infrastructure over the next decade. Additionally, the increase in the R&D tax credit to 30%, which Ibec also called for, will enhance Ireland's credentials when it comes to high-value research, development, and innovation. Large multinational enterprises (MNEs) will retain the benefits of the credit as we move toward a new Global Minimum Tax and SMEs will benefit by more.
The €250 million SME support package will provide much-needed relief for firms facing substantial government-imposed increases in labour costs (up to 25% by 2026). While Ibec said more work needs to be done in this area, it is crucial that this scheme becomes operational as quickly as possible, remains easily accessible, and serves as the starting point for a broader conversation about the transition to a Living Wage, pensions autoenrollment, and other significant labour market changes over the coming years.
Ibec CEO Danny McCoy stated, "Budget 2024 strikes the right balance between investment ambition while further enhancing social cohesion. The establishment of the National Infrastructure Fund best demonstrates this. The fund will ensure the protection of public capital projects during cyclical downturns, reduce the need for 'catch-up' spending, provide improved value for money, and offer greater certainty to sectors downstream of infrastructure delivery. This, in turn, would enable organisations to build capacity and retain skills in both the public and private sectors.
Currently, the most pressing challenge for businesses is the rising costs. Considering inflation and labour demand, it appears that we are in or approaching the peak of the economic cycle. It is essential that we maintain a stable footing and remain as cost competitive as possible. While today's budget takes significant steps in providing appropriate support, ongoing labour challenges and cost issues will continue to be obstacles in the years ahead.
Furthermore, while Ibec is disappointed that the National Training Fund (NTF) could not be unlocked in this Budget, we welcome the intention set out to find ways, including possible legislative changes to unlock the fund. Ireland cannot afford to be complacent when it comes to education, skills, innovation and productivity. In a highly competitive global environment, it is crucial to foster, enhance, and promote high value investment. The National Training Fund can help us deliver the key skills for the 21st century. Businesses will continue to work closely with the Government to find a practical and pragmatic solution to unlock the €1.5 billion surplus in the NTF to ensure that education and training remain essential components of Irish competitiveness."