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Statement prompts election speculation

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Peter Cheney reports on the Spring Statement, which aims to set the tone for the economic debate in advance of an early election.

The Government’s first Spring Statement on economic policy has been interpreted as a waypoint towards the next general election as well as Budget 2016. The poll must take place by 2 April next year but speculation about an earlier polling day – either in the autumn or next February – is increasing with ministers keen to capitalise on the recovery. An early election would also avoid an overlap with the 2016 centenary dates.

The collective total of tax cuts and spending increases will rise from
€1 billion in October 2015 to €1.5 billion in the next planned Budget in October. Ministers are keen to highlight their intention to cut income tax and the universal social charge and to continue with expansionary budgets up to 2020.

Tax increases during the downturn amounted to €10 billion. Planned and actual cuts will return around €2.4 billion to taxpayers between 2015 and 2018 inclusive. Gross expenditure stood at €54 billion in 2014 and an increase of €600-750 million is planned for 2016, giving the Government more scope to respond to demographic pressures in education, health and welfare. This primarily means an ageing population but also includes 50,000 extra school pupils (who will need 3,500 extra teachers) between now and 2021.

Official forecasts put economic growth at 4 per cent in 2015 with stable growth of 3.25 per cent anticipated for the rest of the decade. This would be accompanied by the debt-to-GDP ratio falling from 3 per cent to 2.3 per cent this year, a return to net immigration from 2017 onwards and a return to full employment by 2018. The Government’s new capital plan will be published in June, outlining its infrastructure plans up to 2020.
“We know from other countries that hard-won stability and progress can be too easily reversed,” Enda Kenny stated. “This government will never again allow mistakes to be repeated. We continue our work to secure the recovery, and strengthen its impact on the daily lives of our people.”

Joan Burton added: “It has been the people’s sacrifices, the people’s perseverance in the face of uphill struggle, that have enabled us to get to this point, where we’ve reached the brow of the hill and can see our destination: an Ireland of opportunity and prosperity for all.”

Fianna Fáil finance spokesman Michael McGrath emphasised the need for “a progressive recovery that will benefit all parts of the country and all sections of society” and dismissed the statement as “a self-serving exercise for the Government in congratulating itself.”

Sinn Féin’s Pearse Doherty stated that a fair recovery would begin with an immediate commitment to abolish Irish Water and water charges, followed by the end of the property tax. He added: “A fair recovery must mean an end to pushing more and more of the tax burden onto the narrow shoulders of struggling families.”

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