US tariffs could jeopardise planned tax cuts in budget, warns Minister
tax
cuts in the budget may have to be jettisoned if the EU fails to secure a tariff deal with the US, Minister of State for International Development
Neale Richmond
has warned.
Speaking in advance of the launch of a new report on the State's bilateral trade with Germany, Mr Richmond said the shock to global trade from
US tariffs
had left the Irish economy in a 'tight' situation and that October's budget would be 'very different' from its predecessors.
Mr Richmond's comments represent a growing school of thought in Government that believes it would be fiscally reckless to repeat the windfall budgets of recent years at a time of such economic uncertainty.
Senior sources acknowledge that Ministers will still be seeking spending increases for their departments during the budget process.
READ MORE
However, the hands of the
Department of Finance
and the
Department of Public Expenditure
are likely to be strengthened by the threatening international situation, even if a feared decline in corporation tax revenues does not arrive in the coming months.
'The likelihood of cost-of-living measures in this year's budget is very remote . . . equally there will have to be a real consideration in relation to promised tax cuts,' said Mr Richmond, while noting that capital spending on vital infrastructural projects would be prioritised.
[
US tariffs: Why Trump U-turned on his bombastic tariffs and what it means for Ireland
Opens in new window
]
'There's no point burying our head in the sand and saying everything is going to be great based on this new take on global economics,' added Mr Richmond, referring to US president
Donald Trump
's attempt to rewire the global economy through tariffs.
'We have to be prudent with the country's finances . . . we can't let ourselves be completely ignorant of global events and run budgets that aren't reflective of the risks that are very paramount at the moment,' he said.
Mr Richmond will launch a fresh report highlighting the Republic's trading ties with Germany in the Irish Embassy in Berlin on Wednesday.
The report indicates that Germany is now this State's third-largest trading partner in terms of exports, behind the United States and the United Kingdom, accounting for €48.8 billion of trade in goods and services in 2023.
It also indicates that the State's trade surplus with Germany increased sixfold between 2018 and 2023 to stand at €28.5 billion, an increase that the report links to Brexit.
'Following Brexit, Irish exports to Germany flourished in the pharmaceutical and chemical sectors, potentially reflecting a deeper intra-EU integration as consequence,' it says.
The report indicated that the Republic was Germany's 16th most important export destination, while Irish companies in Germany employed almost 60,000 staff in 2022.
'Now that we're at a slightly precarious time in terms of global trade, where are our most reliable trading partners, the EU and who is our biggest trading partner within the EU? It's Germany,' said Mr Richmond.
Meanwhile, the Government has denied that Taoiseach Micheál Martin and Tánaiste Simon Harris were at cross purposes when expressing views on the US-UK trade agreement.
[
Donald Trump's tariffs pose a 'major risk' to Ireland's economy, Makhlouf warns
Opens in new window
]
On Friday, the Taoiseach made comments that seemed to welcome the deal struck between US president Donald Trump and British prime minister Keir Starmer, and said he hoped a similar arrangement could be struck between the EU and US.
The Tánaiste told the Cabinet meeting, however, that the US-UK deal would help solidify and normalise tariffs as part of the 'new normal'.
The Taoiseach's spokesman, speaking at the post-Cabinet briefing in Government Buildings on Tuesday, said Mr Martin was responding to the dramatic reduction of tariffs being imposed to more reasonable levels.
Mr Harris's spokesperson said the Tánaiste was trying to provide an analysis to Cabinet of what he understood the US-UK deal to be.
He said the Tánaiste had said that there was 'a new normal, a new reality, where tariffs exists'.
Mr Martin also held a 20-minute telephone discussion with Mr Starmer yesterday on the UK-EU summit, which will be held on May 19th. That will look at ways of improving the trade relationship between both blocs.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Irish Times
33 minutes ago
- Irish Times
The Irish Times view on national economic planning: strategy must be recession-proof
National economic planning always involves dealing with significant uncertainties. Ireland's economy has been upended on a number of occasions, requiring sharp changes in policy direction, most notably during the financial crisis which hit after 2008. So a key test of the revised National Development Plan due to be unveiled today will be its resilience. Inevitably a change in economic circumstances will mean that flexibility is needed in any plan, but are the broad goals of what will be outlined achievable, even if the economy is hit by some kind of slowdown, or even a downturn? Some lessons have been learned in the management of the public finances, with cash being put aside in two funds for the future and the annual figures being kept in surplus. That said, decisions have been made much easier by a big surge in corporation tax. And this has allowed the Government to increase day-to-day, or current, spending rapidly, alongside higher capital investment. To leave sufficent leeway, further growth in State capital investment has to be married with tighter control of current spending. Hints on the strategy here may be contained in the Summer Economic Statement, also due for release today. And in the years ahead more tax revenues are also going to be needed. The Irish tax base is increasingly reliant on potentially transient corporate tax receipts and on income tax paid by middle and higher earners. READ MORE The key immediate uncertainty in national planning comes, of course, from the new US policies on trade. Significant financial buffers are needed to deal with the potential fall-out here and its implications for growth and tax revenue in the short term. Ireland cannot go back to a situation where it is forced to slash State investment to balance the books, as happened after the financial crash. The State is still paying the cost of that today through massive deficiencies in housing and other infrastructure. Strong economic growth and high immigration have added to the pressures. Delivery is also vital, of course . Ireland's slow progress on major investment projects has cast doubts over economic growth prospects, potentially hampering investment. Dealing with this is a key social, as well as economic, priority. The outlook may be seriously affected by what happens between the EU and the US in trade talks over the coming weeks. Whatever transpires, it is fair to assume that significant uncertainty will remain for a prolonged period of time. And that this will raise questions about Ireland's economic model and how it needs to adjust. More investment in key infrastructure is a vital part of the answer. As we consider how this is to be paid for, we can only hope that the impact of Trump's trade policies, while certain to be serious, does not become hugely disruptive.
Irish Times
2 hours ago
- Irish Times
Sinn Féin wants 111 changes to Bill reforming ‘triple lock' Irish troop deployment
The Government is set to square off with Opposition parties over proposed amendments to its plan to reform the 'triple lock' mechanism for deploying Irish troops overseas. Public sessions were held by the Oireachtas defence committee as part of pre-legislative scrutiny of the Government's plan to remove the need for United Nations Security Council approval of Irish peacekeeping missions with more than 12 troops. The Government contends countries like Russia have the power, under the UN Security Council motion requirement, to veto Ireland's participation in missions. The defence committee must publish a report on the proposal before it is sent back to the Dáil and Seanad for further consideration. A draft report has been circulated and amendments have been proposed by Opposition parties. READ MORE Sinn Féin has submitted 111 amendments to the Bill. The committee is due to meet in private this week to discuss its recommendations and conclusions, which have not yet been agreed. While the committee is chaired by Sinn Féin's Rose Conway-Walsh , Government TDs and Senators have a majority of the membership. Sinn Féin's defence spokesman, Cork South Central TD Donnchadh Ó Laoghaire , is seeking to insert a recommendation that the Government must drop the sectionthat would remove the UN mandate requirement. Currently the UN mandate, Government approval and a Dáil vote make up a triumvirate of pre-deployment sanctions that have come to be known as the triple lock. [ The triple lock - a guardrail of neutrality, or an abandonment of sovereignty? Opens in new window ] The Bill, as proposed by Government, envisages just Government and Dáil approval would be needed in future. The vast majority of the evidence heard by the committee during the pre-legislative scrutiny stage relates to this aspect, which is by far the most contentious part of the Bill. The draft report outlines that the committee heard Ireland 'appears to be in a unique position globally' in explicitly requiring a UN mandate for the overseas deployment of military personnel as part of an international force. It outlines that some witnesses and contributors - and a majority of public submissions received - 'were clear in their view that neutrality is a key consideration which is central to the proposed legislation'. Sinn Féin is further arguing that the proposed legislation should be modified to recommend the convening of a citizens assembly to consider potential wording for a constitutional provision outlining and protecting Ireland's neutrality. The party wants a referendum to be held thereafter to 'definitively enshrine neutrality in the Constitution'. The Labour Party has also sought changes, including in connection with its concern that each overseas mission could end up being litigated to ensure it is consistent with UN Charter principles. It wants to an amendment calling on the Minister for Defence to publish details about how the new arrangements will work. It also wants safeguards against the dispatch of the Defence Forces in circumstances where it could give rise to liability for the crime of aggression before the International Criminal Court. The party also wants a change to the Bill to the effect that the triple lock would only be lifted if a proposed mission was denied UN Security Council approval due to a veto from a permanent member. It is asking for specific circumstances to be set out in the legislation where troops might be deployed under the new system and seeks for troops to remain under Irish command.
Irish Times
3 hours ago
- Irish Times
Uefa granted extension of illegal streaming blocking order
Uefa, the governing body for European football associations, has been granted a court order extending for another two years a requirement that internet service providers block illegal streaming of its games. The order is similar to one granted last week to the Football Association Premier League also extending the requirement to block the streams for its matches. Mr Justice Mark Sanfey, head of the Commercial Court, agreed on Monday to an application from the Union Des Associations Europeennes de Football (Union of European Football Associations) for the order. It extends the blocking order for the 2025/26 and 2026/27 football seasons. READ MORE It applies to Eircom trading as eir, Virgin Media Ireland, Sky Ireland/Sky Subscriber Services and Vodafone. Jonathan Newman SC, for Uefa, said all the defendants were neutral on the application. The providers are 'conduits' for the streaming but were not liable for any infringements on their networks, he said. Counsel said they are required under the order to block IP addresses which are notified to them in a confidential list. The streams are carried on set top boxes, TV sticks and websites. This was the fourth extension since the original order, he said. The list of infringing platforms is published to providers twice during each match, he said. A very large volume of infringements, running into the hundreds, have been detected, he said. Mr Justice Sanfey said he was satisfied to grant the order. From the evidence, it was clear there are a very large number of streamers and the blocking orders provided by the court previously demonstrates their effectiveness, he said. It was also clear the order also respected the fundamental right of parties, including internet users, notwithstanding the 'enormous number that need to the blocked' and the fact that there has been a minuscule number of complaints about the blocking which were proved to be unfounded, he said.
