Davy Research

Irish economy

Exchequer Returns, March: Public finances behind target early in 2017, but too early for concern

DAVY VIEW

Accounting for a timing effect relating to the country’s EU budget contribution, Ireland’s public finances were close to €200m behind budget targets in the first quarter of 2017. Weak income and corporation taxes were the main culprits. However, the fact that the unemployment rate fell to 6.4% in March suggests that this weakness may be temporary. Corporate tax revenues are always volatile, so it is too early to be overly concerned by the €200m shortfall in Q1. The Budget 2017 target was for a €1.2bn deficit, worth 0.4% of nominal GDP.

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