News
Irish economy returns to growth
Image caption, Corporation tax revenue rose 30% year-on-year in May to €3.6 billionArticle information
- Author, John Campbell
- Role, Economics and Business Editor, BBC News NI
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June 7, 2024, 10:37 am BST
The Republic of Ireland’s internal economy returned to growth in the first quarter of 2024, official data suggests.
Production, measured by Modified Domestic Demand (MDD), increased by 1.4% compared to the last quarter of 2023.
State finances also continue to be boosted by corporation tax windfalls.
Corporate tax income rose 30% year on year in May to €3.6 billion, reversing a slowdown at the start of the year.
Ireland has benefited from reforms to tax rules, meaning that large companies pay much of their overall taxes in the country.
Ireland is in the unusual position of being able to record budget surpluses due to these revenues.
The government began the process of creating a sovereign wealth fund using part of the unexpected tax profits.
What does the Minister of Finance say?
Finance Minister Michael McGrath said: “Global corporation tax revenues have recovered after a sharp fall in the first quarter of the year and are now at the level of the same period last year.”
He cautioned again that these revenues are “volatile” and “we cannot necessarily count on some of these revenues in the future.”
He is expected to set the general tax and spending parameters for the country’s next budget in the coming weeks.
An independent budget watchdog, the Irish Fiscal Advisory Council (Ifac) has warned the minister not to plan an “all now” budget.
It said tax cuts and spending increases could overheat an economy that is already “operating at or above capacity.”
“The labor market is tight, with record employment and low unemployment. Inflation is falling, but underlying measures remain high,” he added.