Strong growth, windfall corporation tax receipts, burgeoning household incomes and rapidly rising private capital investment provided a benign domestic backdrop to Budget 2020. However, we are facing exceptional external challenges. For business, today was no ordinary Budget Day. Global tax reform, mounting trade tensions and the rolling and costly uncertainty of Brexit set a conservative tone within Government, which has delivered a holding position budget.
The good news is that for business, the Minister for Finance responded to our asks. The focus has been on measures which can help shield the economy from external shocks by investing in critical infrastructure, preparing for Brexit, and improving supports for SMEs. A further €900 million in spending on public infrastructure in 2020 will see a cumulative €5 billion increase in annual public capital spending over the last five years. This shows that the Government has been listening to the concerns of business when it comes to core quality of life issues, which are impacting on our ability to attract and retain talent. More must be done, however, when it comes to public investment and the funding of higher education. These areas have not seen the level of ambition needed in new core funding.
The announcement of further supports for business preparing for Brexit is a welcome development. Ibec has set out over the past number of years the need for comprehensive and meaningful supports for the companies, workers and communities that will be the most impacted by Brexit. We look forward to working with the Government over the coming months to make sure that these supports are designed and rolled-out to help the country and Irish business prepare for Brexit.
A package of additional tax supports for SMEs, through improvements to schemes such as the EIIS and the KEEP scheme for share options, is welcome but insufficient. The Minister could have gone much further. On the other hand, changes to the R&D tax credit will have a more significant impact on SME take-up. Over the coming weeks, Ibec will continue to work on your behalf to ensure that the Finance Bill delivers on today’s announcements with workable legislation.
As Budget Day draws to a close, I leave you with a comprehensive analysis of the measures announced today and commentary from the Ibec team on today’s Budget Day Special podcast.
Please do get in touch if you have any queries.