Minister for Finance Pascal Donohoe announced at the outset of this year's budget that: “This is a budget that has been developed in the shadow of Brexit, and the government is clear about the challenges posed by Brexit.”
In the current climate of uncertainty, this budget was never going to deliver cuts in taxes for employees, the self-employed or businesses. In essence, it has been used to protect the economy going forward from the challenges of a No-Deal Brexit.
Here are some of the key points announced in Budget 2020:
1. Brexit
A €1.2 billion package has been announced, excluding EU funding, to respond to Brexit.
€200 million in Brexit expenditure will be available next year, to be allocated across a number of
€650 million will be made available to support the Agriculture, Enterprise and Tourism sectors.
€220 million of that would be deployed immediately. €40 million of funding would be provided to the tourism sector.
€365 million will also be provided for extra Social Protection spending on the Live Register and related schemes.
2. Housing
For anyone trying to buy a house, the Help to Buy scheme has been extended for another two years to 2021.
The Minister also announced funding of €1.1 billion to build social housing, as well as an additional €80 million for the Housing Assistance Payment (HAP) scheme.
3. Tax
There is very little in the way of tax cuts and, specifically, there were no changes to income tax.
The tax-free threshold for inheritance from a parent to a child will increase from €320,000 to €335,000.
The tax intake in 2019 increased by 8.7% and will amount to €58.6 billon by end year.
4. Economy
It seems with an election not too far away, the Government has put an emphasis on public capital investment, which will increase by 22% this year.
The biggest benefactor is the Health Department, which will receive an allocation of over €18 billion - the largest allocation ever.
GDP growth forecast is at 5.5% for this year and the economy is forecast to grow by 0.7% next year.
0.2% surplus in GDP is projected, although a 0.6% deficit is forecast in the case of a No-Deal Brexit.
In conclusion, not much has changed. This budget was unfortunately never going to be able to be used to provide tax cuts and reliefs for employees or businesses. It has been drafted within the shadow of a No-Deal Brexit and, as such, has been used to tackle the challenges that may come post October 31st.
Despite a slowdown, employment growth will continue with an additional 19,000 new jobs expected to be created next year, so make sure to get in touch with us when the time comes!