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As I did some late night swotting before taking part in Grant Thornton’s budget briefings, it was striking just how different the economy is just down the road. An exceptionally strong labour market (which we have too), reasonably robust consumer spending (which we have too) and phenomenal corporation tax receipts (which we hav…oh) have combined to produce an almost €9 billion surplus in the government’s accounts. Next year is likely to see a bit of a dip in the surplus but it is still likely to be more than €8 billion.
This embarrassment of riches meant that the budget was once again able to produce a range of one off supports and longer term measures. This was a mix of splashing the cash now and also taking a strategic, more prudent approach to the future. Key elements that were announced in the budget included changes to tax bands, increases in benefits payments.
Thinking of the future, when an ageing population, greater health demands and climate change measures will ramp up, the government has also created two new funds. The Future Ireland Fund will be established with the potential to grow to €100 billion by the middle of the 2030s. I’m always a touch sceptical about the ‘potential to grow’ caveat in announcements. My bank balance has the potential to grow – it rarely does. That said, this initiative feels like light years ahead of anything we can do up here and will be funded by contributions of 0.8 per cent of GDP annually from 2024 to 2035. It was given a starting pot of about €8 billion this year.
Another €14 billion will be put aside in the Infrastructure, Climate and Nature Fund by 2030. This is a more certain amount, receiving €2 billion annually for seven years. Also, €3 billion will be put aside for helping to achieve carbon budgets through capital projects. This is real money, targeted at significant challenges.
Overall Ireland’s Budget 2024 will have left the vast majority of people better off. For many taxpayers, the total benefit may be over €1,000 in a full year, depending on their circumstances. Not only that, the Irish government has a focus on the future and is making investment decisions now that should benefit future generations.
Contrast that with our circumstances. The Department of Finance have just published a paper on the financial context under which the Secretary of State has asked for options on revenue raising. It is dire. Northern Ireland Executive’s expected day-to-day spending power for 2024-25 is estimated as being £2.3bn lower than required to deliver the same level of services as in 2021-22. Is it any wonder most of my conversations about Northern Ireland public services are about how much worse every is now. I have long called for a line by line assessment of what we spend, whether we can stop doing it or how we can do it better. I have to admit, I’m wavering slightly on the ability of such a process to turn up the billions of pounds needed to run this place. I still think we have to try it. I fear that the direction of travel is revenue raising. The Secretary of State has directed departments to consult on a range of revenue raising ideas. These include increasing tuition fees, removing a range of incentives on our rates and the introduction of water charges.
I was reminded during the Irish Budget about the ‘squeezed middle’ and JAMs – Just About Managing – groups from a few years back and how the Irish budget had really made a different to these groups? Up here, I sense there’s going to be a lot more squeezing to come and little relief in sight.