Public Policy Bulletin, 28 June 2019

Jun 27, 2019

Read about the Government’s Summer Economic Statement published this week, and the Institute’s contributions to the National Economic Dialogue. 

Summer Economic Statement

Unlike other years, Minister Paschal Donohoe has to consider two budgetary scenarios when drafting the statement: One, in which there is a real possibility of a no-deal Brexit, and the other, in which it is all relative smooth sailing in an orderly exit after the 31 October Brexit deadline.

Minister Donohoe has said that the “external environment” is becoming “increasingly challenging” and that the “disorderly Brexit” in now a “real possibility”, which is why the Irish government needs to plan for such an event.

The Summer Economic Statement published this week confirms to us that under the orderly Brexit scenario the government is targeting a surplus of 0.4 per cent of GDP for 2020.  This target will accommodate a budgetary package of €2.8 billion, of which €2.1 billion has been pre-committed to expenditure measures leaving €700 million for further allocation in Budget 2020. However, under the disorderly Brexit scenario, this could involve a deficit in the region of 0.5 to 1.5 per cent of GDP for next year.  The Statement tells us that in September, the government will decide, based on information available at the time, which scenario will form the basis for Budget 2020.

The Summer Economic Statement sets out the key elements of the Government’s budgetary strategy which revolves around the ongoing uncertainty regarding the form Brexit will take. The Statement sets out that the objective of budgetary policy is the protection of domestic living standards irrespective of what format Brexit takes and aims to firstly avoid overheating the economy and, secondly, to build up appropriate buffers so that budgetary policy can support the economy in the event of a disorderly exit.

National Economic Dialogue

Finally, representatives from Chartered Accountants Ireland attended the National Economic Dialogue which took place this week. We represented members on Brexit concerns and on items included in our pre Budget 2020 submission. The Dialogue facilitates an open and inclusive exchange on the competing economic and social priorities facing the government.

More details on the programme can be found on the Department of Finance’s website.

The Institute’s opening statement to the National Economic Dialogue is also available.