This was a Budget like no other. Faced with a health crisis that has brought with it an economic crisis and awaiting the outcome of Brexit negotiations that could make the economic crisis a great deal more difficult, the Minister for Finance may have thought that things couldn’t get any worse. If so, he was wrong as within the previous 24 hours the OECD announced plans for the sort of global corporate tax revolution that, if put into operation, could put a serious dent in Ireland’s corporation tax inflows.
So, what does a doctor do when all his devils turn up on the same day? Having helped nurse a sick patient through the trauma of an intervention by the IMF, Pascal Donohoe is no stranger to the intensive care ward. Keeping the patient alive trumps all else. The devils can wait another day.
With this in mind, the Minister administered live-saving medicine in thick dollops. A budgetary spending programme of almost €18bn will see funds allocated to key areas such as housing, health, education and supports for the Small and Medium Enterprise (SME) sector. The largest share, €10.1bn, will go to investment in schools, homes and public transport and will grab the public’s attention. But the success of the €3.4bn that is being allocated to the Recovery Fund will be crucial. The Fund will be aimed at stimulating domestic demand and employment. Given the surprises continually thrown up by COVID-19 and Brexit, Mr. Donohoe took pains to point out that it will have the flexibility needed to allow government to react quickly to a constantly changing environment.
For all his resolution, Mr. Donohoe needs a lot of things to go right if his medicine is to prove effective. Interest rates have to stay low-to-non-existent to prevent a crippling Budget Deficit, an acceptable deal on Brexit needs to be achieved if agriculture is to be saved and the patient, in the form of the economy, needs to come back from life-support stronger than ever to produce the tax revenues necessary to reduce the country’s debt burden. Apart from the disastrous bank guarantee in September 2008, it is probably the biggest gamble the State has ever made. But Mr. Donohoe is well aware that it’s not for nothing that national good fortune is known as the luck of the Irish.