Ireland aims to ease cost of living squeeze with ‘two budgets in one’
2022.09.26 20:16
© Reuters. FILE PHOTO: A shopper wearing a face masks pushes a trolley in a discount shop in Dublin, Ireland, November 30, 2021. REUTERS/Clodagh Kilcoyne/File Photo
By Padraic Halpin
DUBLIN (Reuters) – Ireland will deliver what ministers have called two budgets in one on Tuesday, making the usual spending increases and tax cuts while also helping firms and consumers pay soaring energy bills in what they hope will be a one-off intervention.
As one of the few European Union countries set to deliver a budget surplus this year – in Ireland’s case due to surging corporate tax receipts – ministers will be able to spend more next year while keeping the public finances in the black.
The government already announced in July it would boost the 2023 budget package to 6.7 billion euros ($6.5 billion) to increase recurring spending and the amount of money people can earn tax-free to help offset some of the effects of inflation hitting a near 40-year-high of 10%.
It also promised a one-off package including grants for companies and cash for households to pay energy bills. That will come in at around 3 billion euros, according to two sources briefed on the negotiations which are nearing a conclusion.
With most of the one-off payments to be made within weeks, the 2021 budget surplus will be lower than the 0.9% of GDP predicted by the finance ministry, while the provisional 2.2% forecast for 2023 does not include budgetary measures.
In May, the European Commission forecast that Denmark would be the only country in the EU to deliver a surplus this year with Sweden, Ireland and Luxembourg joining them in 2023.
Ireland would still be taking in less money that it spends without the corporate tax haul mostly generated from its large multinational sector. Finance Minister Paschal Donohoe is expected to announce he will stash some of the excess receipts into the state’s currently empty ‘rainy day’ reserve fund.
The rest will help fund permanent hikes to social welfare rates, cuts in childcare costs and a public sector pay deal, with additional child benefit payments and allowances aimed at protecting people against fuel poverty among the one-off measures.
($1 = 1.0350 euros)
