Goodbody Stockbrokers has today predicted that that the revised deficit target of just below - €1bn (-0.5% of GNI), set on Budget day, is likely to be met on the back of resilient tax revenue.
The reduction in the deficit this year represents the eighth consecutive annual decline as Ireland continues to make progress on improving the public finances. Tax receipts for December came in €76m behind profile, though after a strong November, the full year tax receipts of €50,737m closed €116m ahead of profile (+6% y/y).
December marked another strong month for corporation tax receipts (+€90m vs profile for the month), finishing the year €486m ahead of expectations. Income tax receipts came in €236m behind expectations for the year. Excise duties closed the month €175m behind profile, negating the strong corporation tax returns.
Furthermore, Gross current spending came in in line with profile in 2017 (+4% y/y) as departments used up unallocated budgets left at year end. Gross capital spending closed the year €44m over expectations (+9.3% y/y) due to a large increase in housing provision. Interest payments on the national debt are 9.6% lower year on year.
Goodbody Stockbrokers today noted, "The strong finish to the year on the public finances front will be welcomed, enabling Ireland to meet its budget deficit target in 2017. Moving into 2018, the Government will be confident of reducing the deficit for the ninth consecutive year. The confidence in the overall economy is evidenced in the early return to the bond markets by the NTMA yesterday, raising €4bn from the sale of 10-year bonds at a yield of 0.944%."