During Covid-19 it became the tale of two Irish economies – the part that was closed or restricted for much of the pandemic and the part that kept on trucking, dominated by multinationals. Next week’s exchequer returns for the first quarter will confirm that profits continued to grow for the multinationals through the pandemic, with another buoyant outcome for corporate taxes.
The final concern will be from the impact of the hit to economic growth from the war. As the Economic and Social Research Institute pointed out in its recent quarterly, all the main engines of growth will be hit – consumer spending, investment and exports. Lower growth in turn feeds through to lower revenues.
The strength of the first quarter returns will increase calls for the Government to “do something” to protect people from higher energy costs. Some movement is likely, but Donohoe and McGrath – faced with concerns that the exchequer outlook could worsen as the year goes on – will argue for measures to be limited. It is a near-impossible political task and potentially more difficult than managing the public finances through the pandemic.