Business leaders from Ibec, the British Irish Chamber of Commerce, and Big Red Cloud respond to Budget 2021

Business, Economy, Irish News | Wed 14 Oct | Author – Business & Finance

Business leaders from Ibec, the British Irish Chamber of Commerce, and Big Red Cloud have responded to Budget 2021, announced yesterday by Minister for Finance, Paschal Donohoe, and Minister for Public Expenditure, Michael McGrath

Ibec, the group that represents Irish business, commended the Budget announcement from Government, in particular the scale of the package and the supports announced to help business deal with the uncertainties raised by both Covid and Brexit.

Ibec CEO Danny McCoy said: “The scale of Budget 2021, the largest in the history of the State, is ambitious but appropriate given the magnitude of challenges facing the Irish economy.

“Ibec has been calling for Government to learn from the mistakes of the past and to not decrease our capital expenditure commitments. Today’s announcement of a planned increase in capital spending is a positive move given the scale of the deficit in both social and physical infrastructure. This investment will be central to our collective efforts in enabling the economy to resurge more competitively and sustainably. It is also positive to see the commitment to fund all island infrastructure projects through the Government’s new Shared Island unit.

“As businesses continue to engage in contingency planning for a ‘Hard Brexit”, Government has made welcome pledges today towards the Recovery Fund and additional measures. It is imperative that we see now these financial supports put to work in the areas of the economy most exposed to the economic fallout of Brexit.”

It is imperative that we see now these financial supports put to work in the areas of the economy most exposed to the economic fallout of Brexit.

Ibec has highlighted in recent months the devastating impact that COVID-19 has, and continues to play, on the domestic experience economy, encompassing the tourism and hospitality sector and its diverse supply chain. Today’s announcement of the Covid Restrictions Support Scheme, a reduction in VAT, along with extension of the Employer Wage Subsidy Scheme is an important first step in getting the experience economy back on its own feet and will undoubtedly provide a lifeline to many businesses in the sector struggling to stay afloat.

Mr. McCoy added that Ibec welcomed the measures announced today to get people back to work, saying: “The costs of high levels of unemployment, both in social terms and to the Exchequer, is unsustainable and can leave damaging scars on our labour market and society. It is welcome to see policymakers building on the lessons of the last crisis and deliver commitments of increased supports and new labour market activation programmes to support jobseekers.”

The British Irish Chamber of Commerce has responded to the publication of Budget 2021. Speaking following the budget announcement, Paul Lynam, Director of Policy at the British Irish Chamber of Commerce, said: “The British Irish Chamber of Commerce welcomes today’s budget announcement. The approach taken today is necessary so that we can protect businesses from the worst impacts of Brexit while also ensuring we build the foundations for future prosperity.

The approach taken today is necessary so that we can protect businesses from the worst impacts of Brexit while also ensuring we build the foundations for future prosperity.

“The British Irish Chamber of Commerce specifically welcomes the creation of the €3.4bn fund to combat the twin threats of Brexit and the continuing impact of COVID-19. The Chamber has long advocated for the creation of a fund to protect sectors most exposed to the consequences of Brexit and a resurgence of the pandemic.

“It is crucial however that businesses benefit from this kind of support irrespective of the outcome of the current trade talks. Businesses have moved to activate their ‘no-deal’ contingency plans and face additional costs in trading with the UK. The decision to increase capital expenditure is the correct one and shows that the Government has taken a proactive approach in stimulating shovel ready job intensive sectors.

“We welcome the VAT tax reduction benefitting the hard-hit restaurant, hotel and hospitality sectors. While the Chamber advocated for a temporary reduction to the VAT rate applicable to these sectors of 0% for the duration of the Covid-19 crisis and then permanently to 9% once the recovery has taken hold, we welcome the reduction to 9% as a respite for a much-damaged sector to get businesses through the winter. We also welcome increases in funding for state agencies and the acknowledgement from the Minister of the challenges facing the Arts, Cultural and Sporting sector with additional resources announced.

“While the British Irish Chamber of Commerce understands the pressures facing the Government in the formulation of Budget 2020, there are some areas that were not adequately addressed in today’s announcement.

“Most notably, the budget doesn’t specify supports to offset the disproportionate impact of Brexit on the agri-food sector. The unprecedented circumstances in which today’s budget was delivered means that the sector may suffer disproportionately from a hard Brexit. That’s why the Chamber feels that more resources, which will be readily available from the EU Recovery Fund, are needed to be deployed to protect businesses in the agri-food industry.”

Marc O’Dwyer, CEO of Big Red Cloud said in response to Budget 2021: “The CRSS and the reduction in the VAT rate will of course be music to the worried ears of some of our struggling businesses around the country. It has to be said that the CRSS is a really good initiative and will hopefully be effective in providing the intended support to SMEs.

The failure to deliver on the signalled CGT reduction with have significant implications for business investment and job creation during 2021.

“However, the failure to deliver on the signalled CGT reduction with have significant implications for business investment and job creation during 2021. The reduction in CGT was one of the single biggest ways the Government could have helped Ireland’s struggling and yet crucial SME sector. This is missed opportunity for the Government and will come as a huge disappointment to the SME sector – the lifeblood of the Irish economy.

“A reduction in CGT would have ensured a much needed injection of capital investment into the sector to facilitate growth and job creation. It would have spoken to the Government’s commitment to the sector. Instead these business owners could be left wondering whether the Government really understands that a vibrant economy is based on the successful combination of large businesses- multinationals – and SMEs.”