It is worth watching not only what the politicians promise to deliver, but when they promise to deliver it.
We have already heard a lot of arguments about what “fiscal space” there will be for budget tax and spending measures.
Whatever the total is, however, the official estimates from the Department of Finance show there will be much more room for manoeuvre in the latter part of the new government’s term.
On the department’s calculations, there would be just €500 million for additional measures in the 2017 budget, but not far off €3 billion in both 2020 and 2021, the last two years of the next government’s full term.
The additional fiscal latitude later in the term is due in part to the fact that the targets ease once the budget moves to balance. Indeed, as we reported this week, we may now have some additional leeway from Brussels, which would increase the room for manoeuvre a bit more.
There are of course big health warnings. Growth needs to continue at a decent pace – otherwise the leeway could quickly disappear.
Even on the benign scenario, however, scope will be limited in the first budget of a new administration. On the department’s figures the net additional spending or tax cuts of €500 million. That is well below the €1.5 billion in the 2016 package, which was augmented by the same amount again in supplementary estimates, most of which goes into the 2016 spending base.
Now there will be a bit more scope – the department’s figures count in indexation of tax credits and bands, which may not necessarily happen, leaving more to spend elsewhere. They also count in higher public pay and spending pressures related to an ageing population – and here again some of this will be presented as “ new” in the budget.
From where we are now, however, the best the next government could hope for is a fairly modest budget next October, a lot less dramatic than the last package of the outgoing Government.
Of course, it might suit the next government to have more to spend towards the end of its term. But first it has to get elected – and voters will be wondering just what can be delivered up front. The answer is that there will be some scope next October, but not a lot.
