While little in today's figures will reflect Budget changes, there will be relief in Government circles that the first post Budget set of Exchequer figures make for generally pleasant viewing.
The key feature of October’s figures was particularly strong corporation tax receipts. As November is a key month for corporation tax, it's possible that by the end of this month there will be further additional unexpected cash in the coffers. The question will be whether this is absorbed by spending overshoots or whether it will add to the surplus.
While taxpayers will only enjoy the benefit of income tax cuts from January, positive consumer sentiment is likely to have been further boosted by the Budget. This could mean a strong Christmas for retailers and buoyant VAT receipts in the new year.
Looking ahead to next year, higher earnings and more people at work mean income tax receipts should remain strong. Disposable income will be higher which should translate into stronger VAT receipts. VAT receipts should also be helped by a greater proportion of surplus cash being used for spending rather than diverted to savings/debt repayments.
Overall the picture is rosy although as an open economy we are always very susceptible to wider global changes. A sustained downmarket in key markets would be bad for foreign investment into Ireland. The ongoing ability to attract overseas investment is a key ingredient of our recent economic comeback.
