Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The Government decided in September that budget 2020 would be based on the assumption of a disorderly Brexit at the end of October. Given the information available at the time, this was the safest and most appropriate course of action. Since I published budget 2020, the risk of the United Kingdom departing the European Union this year without a deal has been reduced. However, the ultimate outcome is still highly uncertain and a disorderly Brexit in 2020 remains a possibility.

Should the United Kingdom leave the European Union on an orderly basis, Ireland's fiscal position will, all else being equal, improve relative to budget 2020 projections, with increased revenues and lower expenditure. The fiscal forecast published with the summer economic statement in June is instructive on the budgetary position in an orderly scenario. The summer economic statement outlined the path for the headline deficit, which involved a technical assumption of tax reductions of €600 million each year and an increase in annual current spending of 3.25%. In such a scenario the summer economic forecast indicated a surplus of 0.4% of national income in 2020.

As I indicated yesterday to the Committee on Budgetary Oversight, I believe it is likely yet again that we will see corporation tax receipts for this year exceed where they were one year ago. We expect the figure to be higher than the projected €11 billion. We expect it be to in line with or above the €11 billion now included in our forecast. That is significantly ahead of what I indicated one year ago. However, I also said that while I expected us to face into another year of potential growth next year in our corporation tax receipts, I also believed it was likely that at some point in the near future that growth would stabilise and then begin to decline. That is why I believe it is now really important that the surplus we established this year is built again if we avoid a no-deal scenario next year. The country must get into the habit of ensuring we run regular surpluses in order that in the event of money not being available to us in future we will not face the risks we have faced in the past.

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