Business And Leadership: The Week Ahead: Budget 2010 looms large

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The Week Ahead: Budget 2010 looms large

08.12.2009
Expect the Minister for Finance Brian Lenihan TD’s Budget 2010 to loom large across the headlines all this week. While the main event takes place tomorrow, the permutations and combinations of what Budget 2010 is really going to cost everybody, along with reaction and fallout, will continue throughout the week.

Expect the introduction of a carbon tax, but if reports are to be believed raising taxes will not form the main impetus of Budget 2010. Rather, cuts are the order of the day, and they are expected to be swingeing in nature.

Cuts of around 4pc in social welfare are expected, with cuts in the order of 10pc for Child Benefit.

Public pay will doubtlessly now be cut following failure to reach a deal with the unions. According to reports, the pay cuts are set to be proportionately larger for those on higher incomes. So while public servants earning average incomes can expect cut of some 5-6pc, those who earn over €100,000 will see pay cuts of say some 7-8pc.

All of these efforts are geared towards the Government achieving savings in the order of €4bn. It is hoped this magic number will be enough to keep the public finances on a relatively even keel and avoid sending the country off the deep end of the European Commission’s budget deficit pool.

Further ructions caused by the Government’s rejection of the pay proposal plan suggested by the public-service unions will also doubtless occupy column inches this week, particularly if Minister Lenihan does what most of the media are predicting in Budget 2010 and cuts public-sector pay.

Already news that the Garda Representative Board (GRA) is to take an unprecedented move and ballot its members for industrial action is indicative of an escalation in the strained relations between public staff and the Government.

Of course, Ireland will not be the only country with budgetary matters on its mind on Wednesday, with the UK Chancellor Alistair Darling set to unveil his pre-budget report, a type of mini-spending review. Speculation is growing that the UK Government will make moves during the pre-budget report towards the introduction of a super-tax on bankers’ bonuses.

Thursday will see the Bank of England announce its interest rate decision.

The focus shifts to the US on Friday, with the release of those all-important US retail sales figures for November, which will incorporate the key US shopping day of Black Friday.

Results are fairly thin on the ground this week as the wind-down for the festive period begins, although Friday does see the HMV group release its H1 results.