Expansionary approach to Budget 2021 – National Economic Plan must build on this
The theme of the Chambers Ireland Budget submission is “Place” and through it we called on Government to support businesses to trade through the pandemic, by supporting liquidity, local economies and the long-term investment needs of the whole economy.
Budget 2021 is the largest Budget in the history of the state and makes significant progress in addressing many of the needs of the most exposed members of the business community.
Speaking this afternoon, Chambers Ireland CEO Ian Talbot said, “The context of this Budget is very different to anything we have ever seen. We have been very conscious that the response to the devastating economic impact of COVID-must be to continue investment, spending and support for the most vulnerable parts of the economy.
Our way through this crisis must be to focus on the bigger picture and to give hope to businesses and local economies throughout the country. It means we must enable and empower our SMEs – the drivers of economic growth in communities across the country – to continue to compete and remain productive throughout the crisis. Most importantly, it means investing in the places where we live and work, so that town and city centres can thrive. In many respects Government has listened to this call. The increase in funding for housing and infrastructure and the creation of a €3.4 billion Fund that will address impacts of both Brexit and COVID-19 is extremely welcome and will go a long way to ensuring a sustainable, equitable recovery across the island.
Our research highlights how badly businesses have suffered due to the pandemic where, on average, their revenue has faced a decline of approximately 30% and for businesses who have had to close, data shows they face on average €10,000 in re-opening costs. The commitment by Government to extend wage supports and provide funding for businesses who are forced to close is the right approach. We commend Government for heeding our call and developing these supports for the business community. The combination of the new reduced 9% VAT rate for the hospitality sector, extension of wages support scheme throughout next year as needed, and the introduction of the COVID Restrictions Support Scheme is an appropriate targeted response which will support businesses into 2021.
Local government and fully resourced local services have never been as important. The extension of Commercial rates waiver was key ask of our network and the additional funding of €300 million is welcome, as local authorities will need the funding that much of the business community will be unable to provide. 2021 will be a challenging year for businesses too however, and it is very possible a further extension will be required into the new year.
In a Budget like we face this year, we appreciate the challenge facing Government in delivering on every ask of the business community. But there are missed opportunities in this Budget. Government should have done significantly more to invest in the affordability of childcare and to support entrepreneurs through reform of CGT and other entrepreneurial reliefs.
They could also have been bolder in funding the recovery of urban centres – there is an opportunity for the National Economic Plan to improve on this, and we urge Government to use it.
The goal of Government in this Budget was to give “hope and confidence”. For this hope and confidence to be delivered, there must be commitment as well, and a strategy to ensure that the places we live, and work are supported to recover.
Living alongside the pandemic remains our immediate challenge, but a sustainable recovery, that reaches all parts of the country and puts place first, must be central to the National Economic Plan next month.
Finally, while welcoming the commitments made, clear processes to deliver the funding allocated from Central Government to Local Government and businesses must be put in place as a priority.”