Summer Economic Statement significantly underestimates Brexit risk – FF

Fianna Fáil spokesperson on Public Expenditure and Reform Dara Calleary has described the Government’s Summer Economic Statement as devoid of any serious consideration of the potentially massive impact of Britain voting to leave the European Union later this week.

Deputy Calleary commented “While we all very much hope that the UK decides to remain in the EU, there is a significant risk that the vote goes the other way. The result is on a knife edge with a number of recent polls, including one today, indicating it is too close to call. The Summer Economic Statement does not adequately address the issue and the consequent policy implications for Ireland. It is my view that the assumptions regarding the impact could well be unduly optimistic given the extent of trade flows between Ireland and the UK.

“The commitment to increased capital expenditure is welcome. It is a belated recognition of the point that Fianna Fáil made when the capital plan was published last October that it would lead to annual capital expenditure well below what is needed to maintain and improve our transport, health and educational infrastructure. However it must be seen in the context of a significant underspend in the exchequer capital budget so far this year. Fine Gael’s record at delivering on major capital projects is very patchy. It is our view that a National Infrastructure Commission is needed to ensure long term planning takes place”.

Fianna Fáil Finance spokesperson Michael McGrath added, “It is welcome that the Government will now have €1bn to allocate in Budget 2017 and up to €11.3 billion over 5 years, given the need to invest in public services and put more money back in people’s pockets. However there is an ongoing concern, expressed by the Fiscal Council and others, that there may be a significant underestimation of pay and other pressures on Government spending. The Government has yet to adequately reconcile this.

“It is our view that the €330m available for tax measures in 2017 should be targeted to benefit low and middle income earners.  It is worth noting that given the impact of non-indexation of tax bands and credits as proposed in the document this effectively amounts to a neutral tax package.

“There is scant detail about how the proposed Rainy Day Fund would operate. Fianna Fáil believes that payments in to the Fund should be clearly linked to any windfall receipts to the State such as Corporation Tax. At the moment the Minister has pencilled in a somewhat arbitrary figure of €1 billion per annum from 2019. Ultimately a clear set of rules will be needed as to when money is paid in to the Fund and the circumstances in which it can be drawn down. It must not become a pre-election slush fund for the Government,” concluded Deputy McGrath.