End of Q3 2019 shows annual tax growth & spending consistent with meeting our targets but careful management crucial for remainder of the year
- The Exchequer recorded a surplus of €38 million to end-September 2019. This compares with a deficit of €1.5 billion in the same period last year, an improvement driven by increases in each of the main revenue streams, partly offset by increases in voted expenditure;
- Although quarterly deficit figures are volatile, with movements between surplus and deficit, the third quarter returns are consistent with achieving our fiscal targets for 2019. This will only be achieved with continued careful expenditure management throughout the remainder of the year;
- Today’s Exchequer Returns show that tax receipts in the third quarter of 2019 are up €3.3 billion (8.7 per cent) year-on-year underpinned by a strong economy;
- Gross voted expenditure is being managed within expectations, and is up 6.6 per cent or €3.0 billion on the same period last year, reflecting the Government’s continued commitment to investing in our public services and infrastructure to meet our people’s needs;
- This performance provides a stable base with which to meet the significant challenges facing us next year.
- Separately, the Irish Fiscal Advisory Council has endorsed the Department of Finance economic forecasts that underpin Budget 2020, as is legally required. These forecasts, which are produced on the basis of a no-deal Brexit in the fourth quarter of 2019, project GDP growth of 5.5 per cent for 2019 and 0.7 per cent for 2020*.
Speaking about the Exchequer figures today (Tuesday) Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D., stated: ‘I welcome today’s Exchequer returns for the third quarter of 2019 which represent a far stronger position than the corresponding period last year, underpinned by a strong economy’.
“All major tax heads continue to perform strongly, with a cumulative total of €40.8 billion receipts in the year to end-September, an increase of 8.7 per cent on the corresponding period of last year and slightly ahead of target. On the spending side, gross voted expenditure at €47.8 billion is currently being managed within targets and, with a year-on-year growth of 6.6 per cent compared to the same period last year, reflects the Government’s commitment to steady and sustainable improvements in public services.
“The strong fiscal performance in the first nine months of the year reflects an economy that is continuing to grow at a robust pace and shows that we are in a good position to deal with the challenges ahead, including Brexit. It is paramount that we continue to build on this work, including through continued careful management of expenditure and the public finances generally.’”
Minister Donohoe went on to say that: ‘The White Paper will be published later this week, setting out the expected expenditure and revenue for next year, based on existing policy, prior to any new measures being announced in Budget 2020. The Exchequer forecast on a post-budgetary basis with be published next week as part of Budget 2020. We are currently on track to meet our fiscal targets for 2019, providing a stable platform for Budget 2020’.
In preparing Budget 2020, EU law (the so-called ‘two-pack’) requires that economic forecasts be endorsed by an independent body in all Member States of the euro area. In Ireland, this function is performed by the Irish Fiscal Advisory Council. The Council endorsed the economic forecasts earlier this week.
Commenting on the forecasts, Minister Donohoe said: ‘The Government has decided that, for budgetary planning purposes, Budget 2020 will be based on a central scenario of a disorderly exit of the UK from the European Union at the end of October. On this basis, the economy will grow by just 0.7 per cent next year, compared with 3.3 per cent previously forecast in the spring. I welcome that these forecasts have been endorsed by the Irish Fiscal Advisory Council’.
ENDS
Note to editors:
* Please note that the GDP figures for 2019 and 2020 have been revised; 2019 up from 3.9% in the SPU to 5.5% and 2020 down from 3.3% to 0.7% based on a no deal Brexit central scenario.
Powerpoint presentation by DoF officials to IFAC is here.
Endorsement letter from IFAC chair is here.
| Growth rate (unless otherwise stated) | 2018 | 2019 | 2020 |
| GDP | 8.2 | 5.5 | 0.7 |
| GNP | 6.5 | 4.3 | -0.1 |
| GDP (nominal) | 9.1 | 5.9 | 2.4 |
| Employment | 2.9 | 2.4 | 0.8 |
| Unemployment rate | 5.8 | 5.2 | 5.7 |