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Cliff Taylor: Five things the ministers needs to aim for in Budget 2021


It will be a budget like nothing we have seen before – framed by the extraordinary circumstances and unprecedented uncertainty caused by the pandemic. Even in the last week, the backdrop has changed.

New restrictions have been imposed on much of the country, pushing many in the hospitality sector to close up – for now anyway. And the threat of a wider lockdown remains and will influence business and consumer decisions.

It is not all gloom. The latest economic reports from the Central Bank, the Economic and Social Research Institute and Ibec all point to the remarkable performance of sectors like pharma, medical devices and computer services in increasing exports and supporting jobs and tax revenue. But much of the domestic economy is being crushed, and the outlook for consumer-facing sectors and for jobs is worrying, especially if there are new restrictions.

So what can Ministers Paschal Donohoe and Michael McGrath do when they present the budget on Tuesday? Here are five things they need to aim for.

1 ‘First, do no harm’

In framing Budget 2021, Donohoe and McGrath must abide by the terms of the medical Hippocratic oath: “First, do no harm.”

This may sound obvious, but on budget day it often isn’t. We have seen before how this can go wrong, via unsustainable tax or spending plans or unforeseen mistakes which explode a day or two later and overshadow the whole post-budget debate. For a government that has stumbled through its early months in office, another needless controversy is the last thing it needs.

Steering a course through this will not be easy, but the two Ministers have tried to set the groundwork, clearly signalling that Budget 2021 will be all about Covid-19 and a couple of key areas such as housing and the green agenda. There simply won’t be the usual round of welfare and tax measures – though of course there will be some tweaks.

And the budget is being drawn up on pessimistic assumptions of a no-trade-deal Brexit and a no-vaccine pandemic outcome for 2021. In turn, this helps the Ministers to fight off demands for other measures.

If this sounds familiar, it is because it is. This time last year, Donohoe fought off demands for extra spending by drawing the budget up on the basis of a no-deal Brexit. This didn’t happen – but it led to a cautious budget and meant there was more leeway this year when the pandemic hit.

Assuming the worst and hoping things go a bit better means that next year there is a chance that budget targets will be met or exceeded again and that there will be some leeway to respond, as the pandemic and the Brexit events play out.



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