Gavan Reilly: The top two in Cabinet will now pull in opposite ways
It’s only the last week of November. I know, I know. Doesn’t it get earlier every year? Is nothing sacred? Can’t we just enjoy the time of year that it is, without looking forward to the bit just around the corner? Why does the build-up start earlier every year anyway? There was a time you wouldn’t hear mention of it until the first week of December, and now you seem to spend half the year looking forward to it. And it’s all gone so commercial.
Well, I’m sorry, but we have to take this bull by the horns. We need to talk about… next year’s Budget.
Simon Harris choosing to appoint himself as the Minister for Finance will materially change the way Budgets are constructed for the years to come. The consequences might still be the guts of a year away, but that doesn’t mean we shouldn’t talk about them now.
For starters, even on a superficial basis, the high-end meetings where the big decisions are made, will now be skewed. Since 2020 those meetings have included the two budgetary ministers, and the coalition party leaders.
Until now, that meant two Fine Gael figures in the room. Now, Simon Harris is flying alone.
This is not just a superficial point, because remember: the Tánaiste is under pressure to deliver something for the masses. Last year’s Budget, as you will no doubt remember, did not include any cut to everyday payroll taxes – instead cutting VAT for hospitality and hairdressers as a way of improving profitability.
Those cuts don’t take effect until July. A funny thing about the last Budget is that by delaying the impact of many cuts until the second half of the year, it made next year’s Budget a hell of a lot more expensive. The measures that will cost €1.3 billion in 2026, will actually cost €2.4 billion in 2027.
In other words: when Simon Harris sits down to draft the tax side of his first Budget, €1.1 billion of his space for new measures is already gone. The economy must grow, and the budget surplus continue to expand, simply to stand still. That’s before he does another single thing. Raise the tax cutoff so that the average worker gets €200 a year? That’ll cost you another €232m. These costs add up quickly.
Sitting at either of Simon Harris’s shoulders will be Jack Chambers, who will want to increase public spending, and Micheál Martin who will insist on it. The housing plan announced two weeks ago demands money: it funds not alone public housing, but also the public infrastructure to facilitate private housing. Without money, there’s no energy or water for anyone else to build with. The spending must happen; it’s a public imperative.
So we’ve a Taoiseach who insists on increasing spending, a Tánaiste who insists on cutting taxes, an American President who still wants to repatriate much of his industries, an AI bubble that could pop, and all the fiscal tumult that would follow.
On second thought, forget I mentioned it. Anyone fancy a mince pie?