On 12 July 2017, the Minister for Finance and Public Expenditure & Reform, Mr. Paschal Donohoe T.D, published the Government’s Summer Economic Statement (SES).  The Statement is an integral part of the reformed budgetary process that facilitates a discussion of the options in advance of the annual Budget in October. The Summer Economic Statement sets out the key elements of the Government’s economic strategy. This revolves around 6 key pillars:

  • Ensuring sound and sustainable public finances;
  • Managing public expenditure to ensure maximum return on taxpayers’ resources;
  • Targeted increases in public investment;
  • Reforming the tax system to ensure it is growth-friendly;
  • Ensuring inclusive growth;
  • Facilitating access to finance, especially for SMEs.

The Statement, which outlines the broad parameters of the Government’s economic strategy, also provides an updated assessment of the fiscal space for next year – this is estimated at €1.2 billion, consistent with ‘balancing the books’ next year.  The full-year costs of measures introduced for this year mean that the current scope for new additional measures is around €500 million for next year.

Minister Donohoe highlighted the importance of looking at the totality of Government spending rather than the incremental changes each year and outlined that the Government would prioritize limited resources in those areas where needs are greatest. The SES sets out that the Government will:

  • Balance the books next year;
  • Implement sensible budgetary policies designed to ensure stability and continued improvements in living standards;
  • Establish a rainy day fund from 2019 onwards, to be capitalized with annual contributions of €500 million from the Exchequer;
  • Increase capital investment by an additional €500 million in each of the years 2019-2021.
  • Focus on the totality of expenditure which amounts to around €60 billion.
  • Continue to reduce the debt to GDP ratio until the 60% legal threshold is achieved. Thereafter work will begin on reducing the ratio to 55% of GPD and, once major capital projects have been completed, the reduced rate of 45% will be targeted.