Ireland ran a budget surplus of close to 2% of Gross National Income (GNI) in 2022, pushing the public finances position to the best in the euro area.
Goodbody Stockbrokers say the €13bn swing from a deficit of €9.1bn in 2021 to €3.8bn in 2022 was solely due to a surge in tax revenues, half of which came from corporation tax.
Tax revenues grew by 22% in 2022, and even surpassed forecasts set in Budget 2023 at the end of October by €1.6bn. Corporation taxes were very strong throughout the year, growing by 48% (+€6bn). Income taxes grew by 15% as all sectors of the economy reopened and earnings and employment continued to increase rapidly. VAT receipts (+20%) also benefited from the economy’s reopening.
Goodbody say Ireland is in the fortunate position of being able to spend large amounts of money on supports for businesses and households, yet still have the best budget position in the euro area.However, Goodbody has warned that the temporary (yet prolonged) boom in corporation tax revenue must continue to be put towards temporary uses.
According to Goodbody Stockbrokers, "The NTMA begins its funding programme for 2023 this morning with the sale of an expected €3bn in a 20-year Green Bond. The NTMA set out a funding range of €7bn-€11bn for 2023. With only €7bn in bonds maturing, a better starting budget position and a significant cash buffer, the need may prove to be smaller. This will depend on the evolution of the economy through the year and policy decisions made."