2024-09-03 06:18:02
It’s a question many European countries don’t have to ask: What to do with budget surpluses? Ireland The fiscal front is green: the country is expected to post a surplus of 8.6 billion euros in 2024, compared with 8.3 billion euros last year and 8.6 billion euros in 2022, according to official data.
While some economists see this as an opportunity “Generationally unique” The government reportedly cited the need to save for future public investment Financial Times.
Surplus related to corporate tax
“Ireland’s problem is not that it doesn’t have enough money – it actually has plenty of money”said Gerard Brady, chief economist at Ibec, Ireland’s largest business lobby group. “The problem is that it’s very hard to find ways to convert that money into concrete things that people need.”
Ireland: Travel to the Emerald Isle
This surplus is due to the good performance of the country’s overall economy, but most importantly, to an increase in corporate tax revenues from international companies in Ireland, mainly in the technology and pharmaceutical industries. This tax brought in 23.8 billion euros in revenue in 2023 and is expected to bring in 24.5 billion euros this year.
Despite these figures, the government claims that the revenue “Unstable, temporary, and unlikely to continue growing at current rates,” Designated Financial Times. Half of corporate tax revenue may actually be of a “Excellent” Or temporarily, depending on the government.
He therefore wants to be cautious and confirm that he is saving for future problems: in particular, the 100 billion euros in surplus must be invested until 2035 to face future challenges related to pensions, climate and to InfrastructureAccording to British media reports. Dublin Part of this money is also being used to repay debts and finance measures to combat Covid-19 and support purchasing power.
But Dermot O’Leary, chief economist at broker Goodbody, said there was evidence “Spending drift” The Financial Times reported: “The government has made some great speeches about the need to be cautious and the decision to set up these savings funds, but the reality has been far less cautious in terms of spending growth (…). It’s difficult for ministers to deal with an embarrassment of riches, especially before an election. So politics will certainly play a role.”
Investing in public infrastructure
For some economists, the budget surplus is a perfect opportunity to address the country’s long-standing infrastructure problems. “Public investment is urgently needed and there is a unique opportunity to finance it ourselves,” Economist David McWilliams explains. “Rarely has a country been given such a rare opportunity to change its society, only to be advised not to do so.”
These areas include: Housing crisispromote Power gridHealth Services, Public Transportation…Emma Howard, a lecturer at TU Dublin, believes that the country should “Look beyond macroeconomics and address social issues.”
As the Financial Times points out, in Ireland, one in seven children lives in a family below the poverty line and nearly two-thirds of the population suffer from anxiety or depression. “We can spend money right now to improve certain social problems. We should think about it because we can afford it (…) This is a lack of imagination” She concluded.
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