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Budget unveiled with Brexit 'safety nets' ahead of 'final settlement'

Published 11/10/2016

Michael Noonan will make history by securing support from the opposition benches
Michael Noonan will make history by securing support from the opposition benches

Most people should have an extra five euro in their pockets every week after a Budget tempered by Brexit fears.

In its first spending plan since the UK voted to pull out of the EU, Dublin revealed it is diverting hundreds of millions into future-proofing the country against the fall-out.

The war-chest funding left Finance Minister Michael Noonan with less to give away in a 1.3 billion euro package, with three times as much on spending as tax cuts.

Despite the Irish economy bouncing back from a historic crash to outperform every other country in the EU, Mr Noonan said the country is facing into new, unknown risks with the impending Brexit.

"We must put in place economic shock absorbers to enable us to deploy resources to reduce or eliminate the impact of future economic shocks," he said.

This includes massive funding to government departments and State agencies charged with protecting overseas trade and diplomacy.

Tourism, food and agricultural businesses, which rely heavily on cross-channel trade, were handed breaks.

Pensioners, parents and first time home-buyers were also given some help among the modest 300 million euro tax cuts and one billion euro spending increases.

Key measures include:

:: Further cuts to the three lowest rates of the controversial austerity levy, the universal social charge, of 0.5%, which works out at around five euro more to spend for average earners.

:: A five euro-a-week rise in the state pension and all other weekly social welfare payments - including the carer's allowance, disability allowance and jobseeker's benefit and allowance.

:: An affordable childcare scheme with both means-tested subsidies for children aged between six months and 15 years and universal subsidies for all children aged six months to three years, to be introduced next September.

:: A new help-to-buy scheme for first-time house buyers struggling to get on the property ladder, giving a 5% rebate of up to 20,000 euro over four years on new houses.

:: 50 cent tax added to cigarettes, bringing major brands to more than 11 euro a packet.

:: One billion euro set aside every year from 2018 for a "rainy day fund".

:: Freeze on the reduced tourism and hospitality VAT rate of 9%.

:: A new sugar tax on soft drinks to be introduced alongside the UK in April 2018.

:: A two-year extension to a home renovation tax-break scheme credited with kick-starting much of the ailing construction industry.

A public sector recruitment campaign, after a years-long freeze, will also see almost 4,500 more gardai, nurses and teachers employed from next year.

The Budget was the first to be announced by a minority Government in the Republic's history and was backed by the ruling Fine Gael's once arch-enemies Fianna Fail.

Michael McGrath, Fianna Fail's finance spokesman, admitted the deal would open them to attacks.

"These attacks will be as predictable as night follows day. What is true is that we have not shirked our responsibility to the people who elected us, unlike others," he added.

But Pearse Doherty, Sinn Fein's finance spokesman, said the Budget was cobbled together in the interests of both parties rather than the country.

"What we have is a backroom Budget, lacking in vision and failing to learn from the past," he said.

Mr Noonan said the economic growth forecast for next year has been cut to 3.5% as a result of Brexit.

But he insisted the Irish economy is in good shape, growing strongly and should continue to grow over the coming years.

"Whatever the final settlement, what we know with certainty is that Brexit has increased risk to the Irish economy and, as well as introducing specific measures to assist particular sectors of the economy, we must also put in place safety nets to protect us against future economic shocks," he said.

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