Thinly-spread help for Irish business unlikely to leave anyone completely satisfied...
With Michael Noonan admitting that "Brexit has increased risk to the Irish economy" before the Dáil this afternoon, the Finance Minister's Budget 2017 included a number of measures for businesses intended to make good on Taoiseach Enda Kenny's earlier promise that it would be "Brexit-proof".
As Newstalk Business Editor Vincent Wall said on air not long after they had been listed, however, there will likely be disappointment from the business community this evening, with more lip service paid than major changes made.
Ian Talbot, chief executive with Chambers Ireland, said it would be impossible to call this budget Brexit-proof.
"It's a great aspiration, but it's impossible to Brexit-proof anything at the moment," he noted. "We don't know what's going to happen with Brexit, but the important thing is that we didn't do any damage with this Budget. I don't think we have, it's a very safe Budget. And we do have the capablilty to be flexible and adaptable – we may need that."
So what action has been taken?
Well, the tourism and hospitality sector is one industry pleased with today's announcement as its special VAT rate of 9% is retained " to act as a buffer for the weakness in sterling".
The Special Assignee Relief Programme (SARP) and the Foreign Earnings Deduction (FED) have both been extended until the end of 2020. In relation to the FED, which aims to assist with the diversification of trade into non-traditional export markets, the minimum number of days required to be spent abroad has been cut from 40 to 30 to help smaller businesses do deals abroad.
Farmers facing an exceptionally poor year are now allowed to “step out” of income averaging to help contend with a volatile post-Brexit agri-food market.
The self-employed will see a €400 increase to their earned income tax credit from January.
As expected, the 20% rate of capital gains tax will be halved to 10% to help entrepreneurs. This is one example, however, where Budget 2017 doesn't go far enough, as a limit of €1 million in chargeable gains remains in place (to apparently be reviewed in future budgets). This compares with the £10m limit in place in the UK.
There has also been no change to share options offered to employees in small startups as yet.
A "Rainy Day Fund" to help absorb economic shocks that could result from the likes of Brexit will only commence in 2019, following the achievement of a balanced budget. A revised target for the debt-to-GDP ratio of 45% has been set.
Minister for Public Expenditure Paschal Donohoe later announced the established of a Brexit team in the Department of Foreign Affairs and Trade, within existing budget and staffing envelopes.
Introducing the aforementioned "step out" opportunity and a number of other measures for farmers, Noonan acknowledged:
"Farming and the agri-food sector has been going through a tough time recently due to lower world prices and weather. Brexit and the subsequent weakness in sterling strongly impacts the agri-food sector. This poses a competitive challenge for farmers and agri-food companies that sell a great deal of their output into the UK market."
Whether said measures, which includes utilising an EU loan fund "that will be low cost, below 3% per annum and highly flexible", will properly protect the sector remains to be seen.
Speaking to Vincent Wall this morning, Dawn Farm Foods chief executive Larry Murrin opined that the weakened sterling has created "an unprecedented scenario" that will last for years to come.
"This is a fundamental shift in how business will be done in the future..." he said. "A structural devaluation, in effect, which absolutely suits the British economy in its current environment and will continue to do so for a long, long time. I don't have a crystal ball but I do know this: it's never going to be back.
"[For] the Irish food and agri sector, Britain is its biggest market – €4.4 billion worth of agri-food products go to Britain every year from Ireland and that helps to sustain 225,000 jobs, directly and indirectly involved in the industry."