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Dublin: 12°C Tuesday 18 May 2021
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The economy will grow but warning there is 'no case for tax cuts'

While Ireland spends more than average among ten rich EU countries, it is behind on spending in education particularly.

Image: Shutterstock/nicole1991

ONE OF THE country’s leading economic think tanks says that there should not be any tax cuts for at least three years.

The latest quarterly observer from the Nevin Economic Research Institute (NERI) calls for any fiscal space to be used on infrastructure, education and research and development.

The NERI report says that Ireland is under spending in those three areas by between €2.5 billion and €3 billion annually.

While Ireland spends more than average among ten rich EU countries, it is behind on spending in education particularly.

“We find that the Irish state significantly under-spends in a number of areas fundamental to long-run economic growth. Most significant are the relative under-investments in education per pupil and in infrastructure and R&D per capita.
The Republic’s cumulative under spend on these areas, when scaled up to a population level, appears to be in the order of €2.5 billion to €3 billion.”

NERI Senior Economist Dr Tom McDonnell said:

“The best way to Brexit-proof the economy is to boost its long-run productive capacity. That means investing in our infrastructure, our people and new ideas. If we are to prosper in the future we will need to invest in our future.”

NERI Director, Dr Tom Healy, added: “There is no economic case for tax cuts over the next three years particularly given existing spending deficits and future spending pressures.”

The report says that a hard Brexit would result in a significant negative shock to both the economies of Ireland and Northern Ireland. Even with that, NERI projects jobs and GDP growth along with a drop in unemployment.

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