As a result of the Brexit vote earlier this year, Ireland intends on cutting down its debt to keep the economy afloat despite the damage to their exporting industry due to the British pound’s sharp decline. Minister of Finance Michael Noonan intends to accomplish this by increasing spending via tax cuts. He intends to reduce national taxes by €1.3 billion (equivalent to $1.45 billion) with the unpopular Universal Social Charge legislation being one of the targets for a tax cut.
By the mid 2020’s Michael Noonan hopes to achieve debt which is at 45% of economic output as opposed to the European Union’s upper limit of 60%. The Irish government believes current debt is 76% of economic output. However, the opposition to Noonan’s Fine Gael Party, the Fianna Fail Party, is the majority of lawmakers in Ireland who don’t support his debt strategy. The Organization for Economic Cooperation and Development claims that while government debts of 75% are safe in the United States and the United Kingdom, a country the size of Ireland should strive for a 35% debt rate.
The United Kingdom is responsible for 16% of Ireland’s exports and the recent plummet of the pound led Noonan to give tax breaks to both the agriculture and tourism industries of Ireland as they are the key players in receiving income from the United Kingdom. However, many think this will not be sufficient and some sort of stimulus package will be necessary.