A SUPPLEMENTARY BUDGET “is entirely possible” according to Fianna Fáil’s Brexit spokesperson Lisa Chambers.
Chambers made he comments at a committee report launch yesterday – and while Fine Gael ministers, in public comments, have been quick to shoot down the likelihood of a second budget announcement, other senior sources in government aren’t convinced it’s been ruled out entirely.
Yesterday, the Economic and Social Research Institute said the government should consider a supplementary Budget in the new year to respond to Brexit.
Ireland could be pushed back into recession in the event of a no-deal Brexit, said the ESRI, stating that a second Budget might be needed to help cope with the effects if there’s a no-deal Brexit.
Minister for Finance Paschal Donohoe has already indicated the Budget this October will reflect a scenario where there is a hard Brexit.
While the warning from the ESRI indicates that a further revision of this Budget may be needed due to the damaging effects of a no-deal, the minster has previously ruled out holding a second Budget post-Brexit.
In the aftermath of the economic downturn, the Budget in December 2010 was the third budget Ireland had in fourteen months.
It followed on from the emergency Budget in April 2009 when the then Finance Minister Brian Lenihan brought in tax rises and spending cuts following the economic crash.
Speaking at the launch of the Budgetary Oversight Committee’s report yesterday, Chambers said no one can know for certain if a supplementary budget will be needed, but added that it is possible.
Budget 2020
She stated that she found it “bizarre” in the first instance that the minister was drafting two budgets and essentially guessing which outcome will be most likely prior to 31 October.
Two budgets were prepared by the finance minister. One which dealt with the case of a worst case scenario Brexit, and the other, formed on the view that a deal would be reached between the EU and the UK.
Donohoe has opted to choose the worst case scenario Budget for October.
The committee has called for clarity on what Brexit supports will be in place for sectors impacted by a no-deal, and how much they will cost.
It has also asked for clarification as to how the Rainy Day Fund can be used in the case of a hard Brexit.
Chair of the committee, Fine Gael’s Colm Brophy, said members had yet to discuss the ESRI recommendations, but said it would meet to look at the matter of a second Budget if necessary.
The committee was established in 2016 in a bid to enhance the level of participation by Oireachtas members in the budget scrutiny process.
While there have been calls for a second Budget in the case of a no-deal, there has also been speculation about a second Budget if a no-deal doesn’t materialise come the deadline of 31 October.
Budget 2020 will be announced on October 8, well ahead of the Brexit deadline for the UK. However, the minister has already chosen to frame this year’s Budget in the context of a disorderly Brexit.
‘Tough, brutal Budget’
One minister described the upcoming Budget as “tough” and “brutal”. They added that it “doesn’t give much away”.
A lot of things can change in the three-week run up to Brexit D-Day, and while Donohoe has indicated he would not have another Budget, even if a deal is struck with the UK, some government sources have indicated that the minister might be tempted.
“If you’re assuming a crash out and a crash out doesn’t come then you are back in business, growth rates go up, rather than down. I think it is legitimate to have another budget then,” said the minister.
“If it goes to the 31st of October and there isn’t a no-deal Brexit, the deal is done, and then we could have another budget,” a senior source said, indicating that a second budget would be acceptable to Paschal Donohoe.
With the Taoiseach very much kicking open the doors to an election at his party’s think-in this year, Fine Gael has entered into general election mode, and will be eager to deliver big-ticket items in the months ahead.
With this year’s Budget giving little away, it is hardly what Fine Gael wants to be remembered for going to the polls, said the senior source.
But if a Brexit deal is done, when might the Fine Gael government like to wheel out their new, shinier Budget, which might have some perks?
“You could leave it to January or February, say we based it on this but it is not that now, especially if they are thinking of having a summer election,” said the government source.
However, some in Fianna Fáil believe that to do so would damage the image of “prudent Paschal”, particularly when the State’s independent finance watchdog has warned government about watching its spending.
Irish Fiscal Advisory Council (IFAC) chairman Seamus Coffey has said the public finances are experiencing a temporary surge due to unexpected corporation tax revenue, and has warned that the current outlook is “unusually uncertain” and Budgets should reflect as such.
“I think the finance minister will be tempted to have a second Budget if a deal is done at the last-minute, but I think the government will want to err on the side of caution given IFAC’s warning. He’ll be tempted, but I don’t think he’ll go for it,” said one Fianna Fáiler.
A government spokesperson said there “is absolutely no plan to have one” [a second Budget]. He added that October’s Budget is designed to be “all encompassing”.
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