The 2021 Budget announcement is one of the most important budgetary proposals that the State has come forward with and we, the Irish Exporters Association, welcome the objective that Budget 2021 is a “bridge to a better future.”
Tackling COVID-19, managing the consequences of a likely disorderly Brexit and addressing the ongoing climate crisis are key issues that the IEA called on the Minister for Finance and the Minister for Public Expenditure and Reform to address ahead of today’s announcement. The IEA welcomes that these three issues are the foundation of Budget 2021 and appreciates the efforts and commitments made to further support businesses at this time and into next year.
In its pre-Budget submission, the IEA made policy recommendations that would assist in keeping businesses open and operating, help to manage the Brexit fallout, tackle the continued climate crisis, keep Ireland competitive and address the new working environment. The IEA’s submission was prepared on the premise that Irish exporting businesses can continue to operate and grow even in the face of uncertainty. With that in mind, Irish exporters need to be deemed essential workers throughout all the levels of restrictions. Early in the pandemic it was clear which workers were deemed essential, we need clarity on this issue to ensure that Irish exporters can lead the economic recovery. Exporters have real concern that any heightening of restrictions may impact their ability to produce and trade and most significantly to hold onto contracts in export markets.
The IEA welcomes Budget 2021 in that it makes no substantial changes to income tax, USC and PRSI and the announcement of further tax benefits for those working from home and is flexible in its approach to deal with the different degrees of uncertainty and challenges facing the various sectors in 2021. In this regard we welcome the announcement of a €3.4 billion Recovery fund to aid the COVID-19 fallout and impending Brexit. The fund will serve as an important tool to assist businesses deal with a likely disorderly Brexit that will further compound COVID-19 efforts. We await the finer details and conditions of this fund and hope that it will serve as a basis for:
- the establishment of a state backed export credit scheme, which we have been long calling for support the roll out of Brexit training to businesses
- support direct shipping routes as a viable alternative to using the landbridge post-Brexit
- supporting the repositioning of Ireland as centre of excellence and a hub for sustainable trade and Investment. With changes in the global corporate tax regime coming, our FDI model needs to be seriously overhauled and this fund should be used as a catalyst to kick-start this repositioning.
- gives a degree of certainty as to the future of the Employment Wage Subsidy Scheme (EWSS) and reassurance that that there will be no cliff edge. We welcome that the Ministers took account of concerns raised in our pre-budget submission, that due consideration needs to be given to the fact that businesses will be potentially dealing with the fallout of a no-deal Brexit and an ongoing pandemic in March 2021 and both issues must be taken account of when assessing whether the current deadline (31 March 2021) and operation of the scheme should be revised. We welcome the Government’s work to draw down funding from the EU’s SURE programme to further finance the EWSS. While we understand that the economic conditions of the day will decide the extension and/or adaption of the scheme, we would reemphasise to the Ministers and wider Government that any plans to change the scheme need to be communicated as soon as possible to allow businesses plan
- puts measures In place to limit the impacts of a disorderly Brexit through the announcement of supports such as the proposed Recovery fund, possible extension of the EWSS and making €340 million in funding available to ensure that Ireland’s airports and ports are equipped with the necessary physical infrastructure and have the staff needed for essential customs, SPS checks and regulatory requirements, as well as the extra €100m to support the work of the agencies of the Department of Business Enterprise Trade and Employment.
- works to address the ongoing climate crisis by directing revenues generated from an increased carbon tax to reducing the country’s overall carbon footprint. The IEA has previously highlighted that the goal of ensuring that Europe becomes the first carbon neutral economy in the world by 2050 will drive the work of the current European Commission and this goal will play an important part in the EU’s Covid-19 economic recovery strategy and Ireland must follow suit. Changes are inevitable.
In conclusion Simon McKeever, IEA Chief Executive said: “What is important for exporters is that the right measures, policies and conditions are put in place that allow exporters to continue to operate throughout the pandemic and drive the recovery in the interest of the country. Exporters need to be designated as essential workers so that heightened restrictions do not hamper their ability to produce and trade. While we broadly welcome Budget 2021, we regret that the establishment of a State backed Export Credit scheme is not included, however we will work to ensure that the proposed Recovery Fund can facilitate its establishment. The use of the €3.4 billion Recovery Fund is of interest to traders that are expecting disruptions in trade flows when the UK departs the single market and customs union on 1 January 2021. We look forward to working with the Government on the operation of this fund to ensure that it is targeted.
The Recovery Fund also needs to be used to seed innovation in our companies and to create the opportunity to establish Ireland as a hub of excellence for sustainable trade and investment.
Access to credit and lending remains a key concern for businesses. Budget 2021 goes some way to ensuring that businesses can access credit, however I believe that an independent lending institution is required.
Overall, and accepting the challenges the exchequer is facing, Budget 2021 supports businesses. Bridging the gap of uncertainty for businesses is key. We called for this bridging in our July Stimulus submission and restated this in our pre budget submission. While I believe that Budget 2021 will go some way in limiting uncertainty, living and working with the virus is having a profound impact and is something that we will have to adapt to.”