Budget 2024: A Double-Edged Sword for the Economy?

Cover Image for Budget 2024: A Double-Edged Sword for the Economy?

| Courtney Price

In this blog, we delve into the intricacies of the much-discussed Budget 2024. This budget has been a hot topic in economic circles, not just for its immediate implications but also for its potential long-term impacts on our economy.

In Budget 2024 and a View of the Future, Cormac Lucey and Declan McEvoy updated participants on the main economic implications of Budget 2024 and on the wider economic and investment landscape.

At first glance, Budget 2024 seems to be a paradox. Despite historically low unemployment rates, it introduces an economic stimulus that some critics argue is economically inappropriate. The concentration of corporation tax receipts is another area of concern, with the top three payers contributing a whopping 33% and the top ten accounting for 60% of the total pot. This heavy reliance on a few major contributors could potentially destabilise our fiscal structure if any of these corporations were to falter.

The budget also straddles both core and non-core measures, indicating a broad approach to economic management. However, it's the government's spending plans that have raised eyebrows. In 2021, the government set a rule to limit spending increases to 5%, aligning with their estimate of the underlying growth rate in the Irish economy. Yet, Budget 2024 breaches this rule, with a spending increase of 6.1%. Future budgets for 2025 and 2026 are also projected to exceed this limit, raising concerns about fiscal discipline.

Inflation is another potential pitfall. Pouring extra money into an economy already operating at full capacity can lead to increased prices rather than increased output. With the workforce already stretched thin, the additional funds may simply fuel inflation rather than boosting productivity.

The forecasted budget surpluses are heavily dependent on windfall profits, particularly from US multinationals paying substantial amounts of corporation tax due to their complex tax arrangements. This reliance on unpredictable windfalls could leave the budget vulnerable to external shocks.

On a positive note, government capital spending is set to rise sharply. This follows a steady increase in government capital expenditure since 2012, indicating a continued commitment to infrastructure development and investment.

Budget 2024 presents a mixed bag of opportunities and challenges. While it promises increased spending and potential economic stimulus, it also raises concerns about inflation, fiscal discipline, and over-reliance on a few major corporations and windfall profits. As we look beyond 2024, the true impact of this budget will unfold, shaping the future of our economy.

For the full session, please click here.

Declan McEvoy and Cormac Lucey covers the following topics during this course:

  • The main economic implications of Budget 2024 and of the government’s wider economic policies.
  • Have interest rates topped?
  • Will there be a recession?
  • The economic outlook for Ireland, the EU and the global economy.
  • Investment market implications.

The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article.

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About the Author

Courtney Price is a content creator for CPDStore. Courtney joined us during the COVID-19 pandemic and has been involved in the ever-evolving world of accounting ever since. Her passion for reading and writing, coupled with her degree in copywriting from Vega School has allowed her to channel her creativity and expertise into crafting engaging and informative content.

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