Economist calls for 'results-focused' Budget

Updated / Tuesday, 10 Oct 2017 11:02

KBC Bank Ireland's chief economist Austin Hughes tells Adam Maguire the country needs 'a Martin O'Neill budget'

While much of today's Budget focus will be around changes to the likes of personal taxation and the welfare system, companies around the country will also be watching closely to see what the Minister for Finance has in store for them. Most will, of course, be hoping for their load to be lightened somewhat, but reports in recent days also suggest that some business-focused taxes will rise in order to fund additional government expenditure.

Austin Hughes, chief economist with KBC Bank Ireland, said that what is needed above all else is a clear message on where the economy is going. "What we could do with, probably, is a Martin O'Neill budget," he said. "One that sets out a fairly clear framework that allows Irish business to compete at the highest level internationally. It doesn't have to be pretty, it has to be results-focused." 

Mr Hughes said that businesses will look for is a budget that lays out a plan for an Irish economy to help it prosper in the coming years. He says today's Budget should also try to incentivise businesses to perform at the highest level, while giving whatever opportunity it can for firms to look beyond the British market and ramp up their exposure further afield. 

To that end, many will be hoping to see some Brexit-specific package within the budget measures, though Mr Hughes cautions that the Government can only do so much in that regard as things stand. 

"I don't think the Government can answer all the questions on Brexit at this point and they probably want to hold back some fire," he said. "But you can incentivise companies to try and look at other markets, you can focus on ensuring that our costs aren't worsened by measures on indirect taxation; that we try to improve direct taxation and we try to incentivise talent in terms of share schemes, entrepreneur capital tax relief. You can't Brexit-proof the budget but you can enhance the business environment that makes it easier for companies to deal with uncertainties in other areas," he stated. 

If the Government can reduce uncertainties and give clarity they will go some way to making firms happy, he said, though it is clear that not every firm will walk away from this afternoon's announcement with a smile. 

One move that has been clearly flagged in recent days is an increase in commercial stamp duty, which is mooted to rise from 2% to 6% in Budget 2018. That is something that many firms will look at cautiously, according to Mr Hughes. "I think there's a concern about the cost and what it does in terms of property," he said. "Obviously business would be particularly concerned if there's a rake of increases in indirect taxes that raise the cost of living and ultimately add to the cost of doing business in Ireland. I'd like to see the detail on commercial tax - I think until we see that we can't be clear but anything that raises the cost of doing business in Ireland has to be avoided in these circumstances."

While it is not entirely a business issue, many firms will also hope to see some progress in terms of the country's infrastructure spending - as companies hope more can be done to loosen the restrictions on their potential for growth. "We want to try to ease bottlenecks in housing, in transport and in that regard I don't think we can find a magic plan today that's going to remove all these obstacles over the next while," he said. "What we want is a clear framework that's credible and sets out that Irish infrastructure is going to improve radically over the next four or five years.

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