Budget Day has long been more about politics than underlying economics and finance. Tomorrow at 1pm we will see an even more acute version of this when the ‘Purse Ministers’ Paschal Donohoe and Michael McGrath together outline our perilous destiny for the end of this year and the course of the year to come.
We already know two things about tomorrow’s national fiscal package that will take us through the end of this year and into 2023.
First, this budget, apart from the staggering €30 billion in spending from the Covid pandemic, will be the greatest gift in this state’s 100-year history. Second, critics of the government, opposition and social campaigns will castigate it as insufficient and/or misguided.
These are the strangest times. We had assumed that this budget would be about consolidation and recovery from the post-Covid economic shocks.
Then Russia’s Vladimir Putin sent those tanks to Ukraine on February 24, causing an economic spasm in the western world in general and the EU in particular. Seven months later, to the week, we are back in the depths of the days of the Covid epidemic – only arguably worse.
Economically it was quite happy until recently. Ireland had record numbers at work ever; there were staggering sums of various taxpayers’ money pouring into the state coffers; and everything, for once in the economic history of this nation, went up and up and up.
Since late February we have been looking at a double digit inflation spiral in Ireland as prices generally explode. We also face a dismal winter as energy bills drive heating bills beyond the capabilities of vulnerable and even less vulnerable people.
Admittedly, we have a staggering €4.4 billion in current surplus. But there’s an understandable fear that those earnings are fickle due to multinationals and may not see us through a crisis that’s likely to last at least into 2024.
There is a strong belief among economists that any action taken must be immediate and one-off, rather than investing recurring expenses into future years when tax revenues may be far less.
Tomorrow the government must help citizens to cope with impossible increases in heating and living costs. If the principle of community is to mean anything, then there must be serious spending.
But the business support programs to be presented must also be about protecting jobs. This initiative will be crucial, as will the range of measures to protect the most vulnerable in Irish society from the rising cost of living.
The design mix is key here – Ireland cannot afford to have higher inflation than other neighboring and competing economies. This happened in the 1970s and 1980s and brought untold misery in the form of emigration and unemployment that only really eased in the mid-1990s. We cannot repeat these mistakes.
We have already entered very uncertain times with no signs of stability anytime soon. How our government fares through the end of this year and into 2023 may well determine the fate of rising generations.
https://www.independent.ie/opinion/editorial/budget-2023-fate-of-our-future-generations-may-well-hang-on-what-paschal-donohoe-says-tomorrow-42016419.html Budget 2023: The fate of our future generations may very well depend on what Paschal Donohoe says tomorrow