Budget Report 2019
The macroeconomic outlook for 2019 is generally positive, Ireland is expected to achieve GDP growth of 4%, down slightly on previous years. Levels of employment are increasing and Government debt as a % of GDP is falling, it is expected to reach 63.5% in 2019, down from highs of 120% in 2012/20131. Debt levels are more accurately reflected as a percentage of Gross National Income (GNI), which also reflect a downward trend.
Notwithstanding this, significant challenges are expected over the coming years. The planned exit of UK, our biggest trading partner from the EU in the spring of 2019 is fast approaching. This will significantly affect rural areas in Ireland due to their dependence on the agri-food sector in terms of economic activity and employment. Wider geopolitical uncertainty and possible disruptions to global trade negotiations, particularly in the US, could also present a threat to current economic growth. For the agri-food sector, 2018 was an extremely challenging year with extreme weather events impacting farming costs.
Such uncertainty and our position in the current economic growth cycle has prompted the Government to work towards building resilience in the economy and the achievement of a balanced Budget. As such the priority is to continue to reduce the Government debt without increasing borrowing.
The Stability Programme targeted a deficit of 0.1% of GDP in 2019, with a budgetary package of €3.43bn. The Government delivered total expenditure of €66.5bn for 2019, comprising of €59.2bn current expenditure, an increase of 4% and €7.3bn in capital expenditure. A tax package worth €291m was also announced. In order to deliver this package, and to reach the target of balancing the government finances in 2019, €700m in revenue raising measures were also announced. In line with fiscal requirements based on expenditure benchmark and the achievement of the medium-term budgetary objectives (MTO), a structural deficit of 0.7% of GDP is forecast for 2019. This is slightly outside the target of 0.5% of GDP, this target will be revised in 2019.