Ireland’s public finances look set to beat original forecasts in 2019 thanks to a surge in corporation tax receipts, according to a new report from Goodbody Stockbrokers.

The latest Exchequer returns published on Friday, show that the general government deficit was €4.7bn in the first ten months of 2018. This is €1.4bn better than expectations, but this outperformance is likely to dwindle by the end of the year. Budget 2019 set out a deficit forecast of €0.3bn in 2018 and this looks achievable.

Government revenues grew by 7% year on year (yoy) in the first ten months, with tax revenues rising by 8% yoy. Corporation tax receipts grew by 24% yoy, with accounting changes a contributor to the surge. These were €1bn ahead of expectations.

On the other hand, excise duties fell by 11% yoy and was €361m below expectations. The two largest tax headings – Income tax (+7% yoy) and VAT (+5% yoy) – continued to grow strongly.

According to Goodbody Stockbrokers, "One could describe the performance of the public finances as a “low-quality” beat this year, with lumpy corporation tax receipts hiding some loss of spending discipline in some areas. At a headline level, balance will (almost) be achieved, but it would be unwise to rely on the current level of corporation tax receipts into the future."

Source: www.businessworld.ie