Irish eyes smiling as austerity set to end
Print Edition
IRELAND will exit six years of deep austerity today as Dublin delivers its first post-bailout budget, with changes to corporate tax rules also expected in the wake of an Apple probe.
Last December, Ireland became the first eurozone country to exit a rescue program three years after turning to the European Union and International Monetary Fund for emergency cash.
Successive Irish governments since 2008 have taken 30 billion euros (US$38.06 billion) from its struggling economy in spending cuts and tax hikes — roughly 18 percent of gross domestic product.
But in recent months, unemployment has fallen and growth has returned. Its GDP expanded by 7.7 percent in the first half of this year, the fastest growth since 2007.
Now Dublin must manage hopes from austerity-fatigued voters, who have borne the brunt of the cutbacks.
Prime Minister Enda Kenny has warned the budget cannot be a “blank cheque” but would, he hoped, “maintain the success and spread the benefit.”
Under EU guidelines, Dublin is committed to achieving a deficit of under 3 percent of GDP in the public finances next year.
The latest official estimates predict a deficit of 2.4 percent of GDP in 2015 without any further adjustment, mainly because more people are returning to work.
“It’s the end of the period where the Irish people can expect swinging cuts and massive tax increases,” said Stephen Kinsella, lecturer in economics at the University of Limerick.
While Dublin may have expected the focus to be on recent successes, it has found itself under increasing pressure to address its corporate tax regime.
A cornerstone of Ireland’s economic policy, corporate taxes are again under attack after the European Commission said it was investigating Apple’s tax arrangements in Ireland.
Finance Minister Michael Noonan is expected to announce changes to the tax regime in his budget speech, experts said. He is likely to signal the closure of a tax loophole, known as the “Double Irish” — a method of shifting profits through Ireland to a low-tax haven to minimize tax.
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