Leading figures from the world of finance spoke to The Irish Times about Budget 2017 ahead of PwC's budget breakfast on Wednesday. This is what they had to say.
Austin Hughes, chief economist, KBC Bank Ireland
How would you categorise Budget 2017?
“I think Budget 2017 is what you might call a small budget. There were certainly no surprises or shocks, and that’s a good thing in the current environment.
“We shouldn’t underestimate the capacity of a minority government to get through a package of measures that keeps the public finances improving and gives a little bit of a boost to the Irish economy.
“The fact that the budget signals stability rather than shocks – the fact that it signals business as usual for the Irish economy – I think they’re all quite significant developments.”
The Irish Fiscal Advisory Council has suggested the Government may have overspent. What are your views on that?
“Of course economists typically disagree about these things. The reality is we’re making very substantial progress. While the public finances are still a very key concern, it’s also important to support economic activity.
“The economy is going to grow a little bit slower next year. In that context, I think the Government is right to stretch a little bit of leeway in terms of the EU fiscal rules. I would have stretched a little bit more.”
Was there enough in the budget to protect the economy from Brexit fallout?
“It’s virtually impossible to Brexit-proof the Irish economy. We see the weakness of sterling at the moment. It’s going to pose quite a few problems for exporters. What the budget does is give a little bit of support to the economy. It reduces income taxes. It avoids really silly measures in terms of raising excise duties on alcohol or fuel that would encourage cross-Border shopping.”
Jean Delaney, PwC international tax partner
What were your overall impressions of Budget 2017?
“What we’ve come to expect over the last few years is a reaffirmation the 12.5 per cent corporation tax rate is here to stay, and we got that again.
“Perhaps the area FDI would like more of these days is in relation to personal taxation. Anything that can bring down the burden, that makes it more attractive for people to come and be in Ireland, is going to be a help over the next number of years.”
Is the economy prepared for Brexit?
“Brexit is very hard to plan for because we’re not 100 per cent sure what it’s going to look like. The most important thing at the moment is that there is a little bit of capacity, so if Brexit produces a downturn in the economy, we can cope with that without having to make wholesale cuts.”
Martin Shanahan, chief executive, IDA Ireland
How would you describe Budget 2017 in terms of attracting investment?
“Steady as she goes. I think that’s how international investors will see it. That’s important in a world where there is so much uncertainty. We’re dealing with Brexit, international tax changes, geopolitical unrest, so Ireland being seen as consistent and providing certainty is positive from an international investor perspective.
“We consistently hear from investors in relation to education and supply of property. The moves yesterday to increase funding for education, particularly third-level education, and the initiatives around increasing the supply of residential property will be particularly welcome.”
Was there anything in the budget that will help you bring business to the Republic from the UK post-Brexit?
“Any of the perceived challenges in relation to Ireland, whether that is supply of talent or residential property, there are initiatives in the budget that will address them.
“Obviously there are other elements from an enterprise perspective that show incremental improvement. There are improvements in the USC, the extension of the special assignee relief programme, the extension of the foreign earnings deduction.”
Marie Hunt, head of research, CBRE
What was the big story in the budget for you?
“From a property perspective, the big story was the first-time buyer help-to-buy scheme, which on its own would concern me. The big problem in the market at the moment is on the supply side. It’s very much a demand-led initiative. I think it was a missed opportunity in many senses that we didn’t address the supply issue yesterday.”
Patricia Callan, director, Small Firms Association
How was the budget from a small firm’s perspective?
“The budget was disappointing. Certainly in terms of the Minister saying he had brought in Brexit-proof measures, because I don’t think enough was done. Certainly, we’ll be going back to the Government in relation to issues like the currency crisis.”
Were there any positives?
“The 9 per cent VAT rate for hospitality was essential. That’s certainly very welcome. It has a huge impact in terms of employment around the country. Overall, it was a prudent budget but I would be concerned about the push towards more spend rather than looking at our tax system to make it more competitive than the UK.”
Joe Tynan, head of tax, PwC
What were your overall impressions of the budget?
“It was useful to see a reaffirmation of the 12.5 per cent rate and the paper the department published setting out the position on international tax will help us manage that internationally.
“Individually it’s quite easy to be disappointed with each part. He went perhaps too far in relation to the spending in the overall economy. He didn’t go far enough in relation to competitiveness, but we need to take the budget as a whole.”
Padraic O’Giollain, managing director, Hottinger
Were you pleased with the budget from a business perspective?
“Overall it’s been a broadly positive budget. There were no major surprises in it. The economy is doing relatively well. That will underpin the small gains for employees and entrepreneurs. The jam was fairly thinly spread, but at least there was jam.”
Were there any specific measures that pleased you?
“One thing I am pleased with is the focus on entrepreneurs and entrepreneurs’ relief. Although it is rather small, it is an indication that we have to encourage that end of the industry.”
