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(Bloomberg) — The Irish government outlined a more cautious spending plan for its next budget package, a sign it is tightening the purse strings as global trade turmoil risks slowing growth in the multinational-dominated economy.
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Plans for the October fiscal event comprise of an overall budgetary package of €9.4 billion ($11 billion), according to the government’s Summer Economic Statement published Tuesday.
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Its a reduction from last years budget package, which ultimately amounted to €10.5 billion and included several pre-election giveaways such as tax cuts and one-off increased welfare payments. This package is more focused on capital investment to address the country’s infrastructure gaps.
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The government also signed off on a €112 billion revised infrastructure plan to run until 2030 to tackle the country’s housing, energy and water constraints. The total amount is boosted by revenue from the €14 billion Apple Inc. tax ruling and the proceeds from the state’s sale of shares in AIB Group Plc.
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The more prudent package underscores how exposed Ireland’s small, open economy is to the US’s tariff threats. President Donald Trump repeated vows to re-shore the assets of American companies with bases in Ireland, such as Pfizer Inc. and Eli Lilly & Co., has raised questions about what would happen to the corporate tax intake if multinational investment slumped.
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Last year, the treasury reaped a record €39 billion in corporation tax receipts, giving Ireland one of Europe’s only budget surpluses. However, the Finance Ministry has warned for several years that it cannot continue relying on the volatile intake from a concentrated number of firms.
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The issue has become more urgent as Trump’s administration has repeatedly singled out Ireland, saying it runs its surplus at the US’s expense.
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“This revised national development plan and the outlined budget plans which we are publishing today reflect our determination that Ireland will meet and overcome the challenges we face,” Irish Prime Minister Micheal Martin told reporters in Dublin. “We will not sit back and wait to see what will happen. We will implement clear and determined action.”
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