EU to fight for Irish whiskey deal with India to take edge off Scotch and bourbon
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• The inside story of how Brussels negotiators are working to level the playing field for Irish distillers
• Why Irish whiskey faces being undercut in India
• How Trump's trade threats are reshaping global markets

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Irish Daily Mirror
an hour ago
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Central Bank Governor sends stark warning to Paschal Donohoe about Budget 2026
Budget 2026 will need to 'entail trade-offs' and require the Government to make 'choices and commitments' on spending and tax, the Central Bank Governor has warned. In Governor Gabriel Makhlouf's annual letter to Finance Minister Paschal Donohoe ahead of Budget 2026 in October, he warned of the dangers posed by the 'narrow' income tax rates. The Government has repeatedly narrowed the tax base by changing workers' tax rates. This has been done by changing the USC rates and bands and the cutoff for the higher income tax rate. There have also been changes to VAT rates, with the Government already signalling further changes in Budget 2026 that would see the rate for hospitality permanently drop to nine per cent. However, Mr Makhlouf warned that global uncertainty and impending tariffs mean the Corporation Tax is unreliable and the Government will need to make 'trade-offs'. He wrote: 'In my view, current economic and fiscal conditions imply that budgetary policy is now in a good position to address the following three priorities: improving resilience and broadening the tax base given risks to the sustainability of corporation tax; addressing infrastructure gaps in a sustainable manner; and planning for the fiscal impact of long-term challenges. 'Achieving progress across these three areas will entail trade-offs and require choices and commitments to be made on public expenditure and taxation, along with reforms to improve efficiency in the delivery of public capital expenditure and the crowding-in of private investment. 'The right choices made in a timely manner can boost long-term potential growth, safeguard the public finances and underpin sustainable growth in living standards for the community as a whole.' Mr Makhlouf noted that changes in the global economy 'transmit more directly to Ireland than most other countries' and that changes to US trade, tax or economic policy could 'have negative implications for the public finances, the labour market, and the economy more generally' in Ireland. He further warned that economic growth projections are being revised downwards due to the tariffs, and that the fiscal policy created by the Irish Government is 'particularly important for ensuring sustainable economic growth and inflation'. He told Mr Donohoe that 'a rapidly growing economy and exceptional Corporation Tax receipts could be threatened in the coming years'. He continued: 'Analysis by Central Bank staff also points to vulnerability arising from the relative narrowness of the income tax and VAT bases in Ireland. 'The income tax base is highly concentrated, with 8.5 per cent of the highest-income taxpayers in Ireland accounting for 56 per cent of aggregate personal income tax revenue. 'And the VAT base also appears relatively narrow by EU comparison, owing to both changes in the composition of household expenditure over time as well as the widespread application of reduced and zero rates to a variety of goods and services.' He added: 'The medium-term resilience of the public finances points to a need to broaden the tax base to increase government revenue as a share of national income so as to address known emerging funding needs and to mitigate the reliance on corporation tax receipts.' Elsewhere, the Government has been slated following confirmation that cuts to student fees will not be kept as part of Budget 2026 and fees will revert to €3,000. Higher Education Minister James Lawless confirmed that the previous €1,000 cut had been part of a cost-of-living package and 'as things stand,' it will not be repeated. Sinn Féin's Pearse Doherty branded the news a 'scandalous slap in the face for young people and their families'.


RTÉ News
an hour ago
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World economy faces 'pivotal moment', central bank body BIS says
Trade tensions and fractious geopolitics risk exposing deep fault lines in the global financial system, central bank umbrella body the Bank for International Settlements, said in its latest assessment of the state of the world economy. Outgoing head of the BIS, often dubbed the central bankers' central bank, Agustín Carstens, said the US-driven trade war and other policy shifts were fraying the long-established economic order. He said the global economy was at a "pivotal moment", entering a "new era of heightened uncertainty and unpredictability", which was testing public trust in institutions, including central banks. The bank's report is published just over a week before US President Donald Trump's trade tariff deadline of July 9 and comes after six months of intense geopolitical upheaval. When asked about Trump's criticisms of US Federal Reserve Jerome Powell, which have included Trump labelling the Fed chair as "stupid", he was not overly critical. "It is to be expected at certain points in time that there will be friction," former Mexican central bank governor Carstens told reporters, referring to the relationship between governments and central banks. "It is almost by design". The BIS' annual report, published yesterday, is viewed as an important gauge of central bankers' thinking given the Switzerland-based forum's regular meetings of top policymakers. Rising protectionism and trade fragmentation were "particular concerning" as they were exacerbating the already decades-long decline in economic and productivity growth, Carstens said. There is also evidence that the world economy is becoming less resilient to shocks, with population ageing, climate change, geopolitics and supply chain issues all contributing to a more volatile environment. The post-Covid spike in inflation seems to have had a lasting impact on the public's perception about price moves too, a study in the report showed. High and rising public debt levels are increasing the financial system's vulnerability to interest rates and reducing governments' ability to spend their way out of crises. Wall Street extended its rally on Friday, sending the S&P 500 and Nasdaq to all-time closing highs - with each adding 0.5% - while the Dow climbed 1% higher. "This trend cannot continue," Carstens said referring to the rising debt levels and he said that higher military spending could push the debt up further. Hyun Song Shin, the BIS's main economic adviser, also flagged the sharp fall in the dollar. It is down 10% since the start of the year and on track to be its biggest half yearly drop since the free-floating exchange rate era began in the early 1970s. He said there was no evidence that this was the start of a "great rotation" away from US assets as some economists have suggested, but acknowledged that it was still too early to know given sovereign funds and central banks move slowly. Shorter-term analysis, though, showed "hedging" by non-U.S. investors holding Treasuries and other US assets appears to have made an "important contribution" to the dollar's slide over the last few months. "We haven't seen anything (yet) that would give us any cause for alarm," Shin added. The BIS had already published one part of its report last week that gave a stark warning about the rapid rise of so-called stablecoins. In terms of the BIS' own finances, it said it made a net profit of $1.2 billion, while its total comprehensive income reached a record high of $5.3 billion and currency deposits at the bank also reached a new high.