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Posts in the "Government Spending" category

UK Spring Budget. The calm before the storm

Posted on March 08, 2017 by Paul Mac Flynn

In what will be the UK's last Spring Budget, earlier today Philip Hammond gave what could only be described as a lacklustre financial statement to the House of Commons. There were moves to increase funding for Social Care and a small reversal of the increases to Business rates in England. At UK level, there as an increase in National Insurance for the self-employed but also an increase in tax thresholds with the higher rate threshold moving up to £50,000. The increases in the thresholds will benefit higher income tax payers more than modest gains for lower earners. For Northern Ireland, specifically, there was an increase of £120m in block grant spending over the next three years with £90m for day to day spending and £30m for capital projects. To put that in context £90 is 0.9% of Northern Ireland's current day to day resource spending. The block grant is set to fall by £184m in real terms by next year alone and to fall by over 5% by 2020. Whilst any new funding is welcome, austerity will continue to be the economic narrative in Northern Ireland for many years to come.

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Permanent link | Categories: Government SpendingNorthern Ireland Taxation

Innovation Inputs, How does the Republic of Ireland Compare?

Posted on February 01, 2017 by Tom McDonnell

Lego bricks

The Republic of Ireland’s industrial and enterprise strategies will have to evolve in the future to adjust to changing political, economic and technological realities.

One constructive step that the Irish government can take to future proof its economy is to renew its focus on innovation policy with a view to building a world class innovation system. Technological change and innovation have long been of fundamental interest to economists because of the belief that sustainable long-run economic growth depends on the ability of the economy to produce and diffuse new innovations.

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Permanent link | Categories: Government SpendingInvestment

Productivity and Innovation are the only things that can drive Long-run Growth

Posted on January 26, 2017 by Tom McDonnell

Puzzle

The world is changing and Ireland’s industrial and enterprise strategies will have to evolve if we wish to thrive in this new reality. One constructive step that the Irish government can take is to renew its focus on innovation policy with a view to building a world class National System of Innovation. Technological change and innovation have long been of fundamental interest to economists because of the belief that sustainable long-run economic growth and development along with improvements in quality of life depend on the ability of the economy to produce and diffuse new innovations.

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Permanent link | Categories: Government SpendingInvestment

Autumn Statement 2016

Posted on November 23, 2016 by Paul Mac Flynn

The Autumn Statement delivered by the new chancellor of the Exchequer Philip Hammond is the first substantial financial statement made by the government since the BREXIT referendum result in June. Naturally the referendum and its consequences featured heavily in the announcements, but it is still clearly too early to make any definitive forecasts for the longer term.

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Permanent link | Categories: Government SpendingLiving wageNorthern Ireland Wages

External shocks - change the detail but no need to rewrite the productivity playbook

Posted on November 04, 2016 by Tom McDonnell

TTIP

The vulnerability of the Republic of Ireland economy to external shifts and shocks was brought home in 2016 in at least two ways. While the potential Brexit from the European Union (EU) has unclear political implications, it has almost certainly negative economic implications. At the same time, the opening shots of an international or at least EU clamp down on aggressive tax avoidance has exposed the fragility of Irish industrial policy to external policy shifts.

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Permanent link | Categories: Government SpendingInvestmentMacroeconomics

Internal Devaluation and the Irish Crisis

Posted on September 23, 2016 by Tom McDonnell

Beckett Bridge - Photo Credit: Michael Foley Photograph Flickr creative commons page: https://www.flickr.com/photos/michaelfoleyphotography/
Photo Credit: Michael Foley Photograph Flickr creative commons page: https://www.flickr.com/photos/michaelfoleyphotography/

The European Trade Union Institute have published a policy inBrief by Tom McDonnell discussing the Irish economic crisis and its aftermath. You can find it here.

Permanent link | Categories: Government SpendingIncomeJobsLabour costsMacroeconomicsWages

Opening Statement to the Budgetary Oversight Committee

Posted on September 13, 2016 by Tom McDonnell

Public sector employment - NERI blog on public sector employment in the Republic of Ireland
NERI blog on public sector employment in the Republic of Ireland

The Select Committee on Budgetary Oversight commenced a series of pre budget hearings last week with contributions from DKM, NERI, the Irish Central Bank, and the ESRI. The hearings will continue this week with contributions from the Fiscal Council and from the European Commission and then next week with contributions from the Minister for Public Expenditure and Reform, the Revenue Commissioners and the Minister for Finance. The pre budget report is due to be finalised on the 29th of September in advance of the budget.

It will be interesting to see whether the report has an influence on the policies announced on budget day. In any event the Committee should become more influential in future years once it beds down as a year long presence.

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Permanent link | Categories: Government SpendingInvestmentMacroeconomics

Fiscal Space: A Short Primer

Posted on June 23, 2016 by Tom McDonnell

Government Buildings - Budgeting for the future
Budgeting for the future

The parameters for Budget 2017 are set by the requirements of the preventive arm of the Stability and Growth Pact (SGP). The preventive arm is assessed under two main pillars. These are the Structural Balance Rule and the Expenditure Benchmark Rule.

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Permanent link | Categories: Government SpendingInvestmentMacroeconomicsTaxation

UK Budget 2016 - Ominous Revisions

Posted on March 16, 2016 by Paul Mac Flynn

Today's statement in the House of Commons marked George Osborne's eighth budget in just under six years as Chancellor. Whilst there were many eye-catching policies such as a tax on sugary drinks and reforms to ISAs, they could not distract from some major revisions to UK economic growth. The Office for Budget Responsibility cut their forecast of UK GDP growth in 2016/17 to 2%, down from 2.4% outlined last November. GDP forecasts are cut further by an average of 0.3% out to 2020, putting significant strain on the Chancellors commitments on the public finances.

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Permanent link | Categories: Government SpendingMacroeconomicsNorthern Ireland Taxation

Fiscal Space, Irish Water and Water Charges

Posted on March 07, 2016 by Tom McDonnell

Water Network - NERI inBrief on alternative methods of charging for water
NERI inBrief on alternative methods of charging for water

In an earlier blog I noted that the government's available fiscal space over the next five years, after accounting for demographic costs and the indexing of public spending for inflation, would be somewhere in the region of €2.5 billion to €4.5 billion. The Fiscal Council estimate €3.2 billion. The fiscal pressure eases somewhat if, as expected, the European Commission ends up allowing an additional €1.5 billion of leeway over the next five years.

The upshot is that the space for increasing real spending on health, housing, education, infrastructure and other areas of public spending will be highly constrained over the next five years in the absence of measures to increase government revenue.

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Permanent link | Categories: Government SpendingInvestment

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