Tag: liz truss

Ireland 2023 Budget A Budget That Puts Its Citizens First

Imagine a budget that would benefit those that are worse off, a budget that puts both its citizens and the economy first.

Look no more, the Republic of Ireland have done just that.

Finance Minister Paschal Donohoe has announced the new Republic of Irelands 2023 budget and it’s a joy to see.

Coverage of the budget can be found on RTÉ One, RTÉ Radio One and RTÉ News Now via catch-up.

Social Welfare

Also announced was a payment of child benefit which will be paid before the end of the year.

Carers and people with disabilities are expected to receive a one-off €500 payment.

Other social welfare recipients will receive a double welfare payment in the weeks after this budget has been announced. A Christmas bonus payment will also be paid in December.

Pensioners will be receiving one-off payments of up to €1,100 before the end of the year.

A double payment of the €253 per week state pension will be paid twice, once soon after the Budget announcement and another in December.

Pensioners that are in receipt of the Living Alone allowance will also receive a separate €200 payment. Those claiming a Fuel Allowance are also in line for a single €400 lump sum on top of their usual payments.

Energy crisis

All households in the republic will receive a €600 electricity bill credit, this will be paid in either two or three instalments. Energy bills will not be capped.

The already existing Fuel Allowance scheme will now be extended to up to 80,000 people who currently did not qualify for payments.

This will ensure that approximatley 450,000 people will now be able to claim for the Fuel Allowance over the coming months.

Childcare

Children’s Minister Roderic O’Gorman announced that he has secured significant funding which will provide a State subvention for creche costs. This could save families up to around €170 a month.

Housing

Under the budget changes there will be the re-introduction of a tax credit for citizens that rent their homes. This will bring the total of amounts given to €1,000.

Ministers have are also implementing two credits of €500, one of which will apply this year and the second next year.

Also included are a two year extension of the Help to Buy scheme that gives a tax rebate of €30,000 to first-time buyers.

Health Budget.

Whilst the Republic doesn’t have the NHS, the government does recognise the need for everyone to be able to access their GP

As it stands half of the Republics population will already have access to a free GP visit card or medical card. This has now been expanded by the Health Minister Stephen Donnelly.

Donnelly has successfully secured Budget funding to expand the free GP visit card to an additional 430,000 people.

This will result in around 2.5 million extra citizens, thus enabling the new recipient’s access to free GP services.

Also announced in Tuesday’s Budget are plans to abolish hospital charges for all adults.

Included in the budget also are plans to abolish hospital charges for children under 16 making it a much fairer system and assessable to all.

Tax Changes.

The higher tax rate of 40% will now apply only to earned income of over €40,000. This move will put an estimated €800 into the pocket of a single earner and €1,600 for a couple. Proving to be one of the biggest tax cuts in recent years.

The second USC band will also be increased to €10,908 from €9,283 keeping in mind the increase in the minimum wage for workers.

Meanwhile, personal tax credits for carers will also increase by €100 to €1,700.

Business

Businesses haven’t been forgotten in their budget either.

Some businesses will get up to €10,000 a month paid in their electricity or gas bills as part of the €1bn scheme to be announced in todays Budget.

Small to medium enterprises will have 40% of their energy cost increases in electricity or gas bills and will be paid up to a maximum of €10,000 per month.

The Temporary Business Energy Support Scheme (TBESS) will also be backdated to Septembe and ran until February. This will be administered by Revenue Commissioners.

A separate €200m scheme has also been announced, this scheme will see businesses being able to receive up to €2m in financial aid.

The Enterprise Ireland scheme will be aimed at companies that are involved in exporting and manufacturing.

To receive this help businesses will have to produce a business plan that shows clearly how they will get through the crisis and control their energy costs.

The two new schemes will also be backed up a low-cost loan.

Inheritance tax

No changes will be made to the inheritance tax ceiling.

There will also be no changes to Capital Gains Tax arrangement, rates and rules.

Gardaí

Extra funding will be funding for 1,000 new gardaí to begin training in Templemore next year.

There will also be 400 new Garda staff to be employed which will help free up frontline gardaí for core policing duties. Also included will be an increase in overtime to help gardaí tackle crime and anti-social behaviour.

Hospitality

The VAT rate for the hospitality industry will increase from the pandemic reduced rate of 9pc to 13.5pc at the end of February which will be significant blow for pubs, restaurants and hotels.

Students

Students will see their fees cut, they will also see an increase in their grants.

 Third-level fees are to be cut by €1,000 this year, with a once-off double payment of the student grant also included in this Budget.

This will mean that no one will pay more than €2,000 to attend third-level education for the coming term. 

Those studying for PHDs will get a once-off cost-of-living payment before Christmas.

There will also be a new free schoolbook scheme for children in primary school is to be introduced. Student/teacher class ratios will also be reduced.

Irish colleges

An extra €2.5m to support the Irish summer colleges sector.

This will include a 10% increase in the subsidy per child for mná tí, who provide meals and accommodation for Irish students.

Public transport

The 20% reduction in public transport fares will continue until the end of 2023.

Whilst it’s difficult to compare the UK to the Republic of Ireland’s government, it’s clear to see that they have recognised the need for extra financial help for its citizens.

This budget announcement shows that the Republic acknowledges that for a country to grow economically and is going to invest in it’s citizens. Not only are they investing financially, they’re also investing in the well-being of the population.

Although this might not appear a lot to some it will help those worse off financially to access medical help. This can only be a good thing.

A country that fails to invest in its citizens like the UK will ultimately end up failing financially. A good healthy economy is needed to ensure the smooth running of everything, and to do that financial help is needed for those worse off especially during the cost of living crisis and beyond.

The reputation of Brand UK has been permanently tarnished, leaving investors forced to move away and look to countries such as the Republic of Ireland as a safer bet.

The UK deserves better than this.

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UK Interest Rates Biggest Hike In 27 years. Inflation Rates Highest Since 1980

The Bank of England has announced its largest interest rate rise in almost 30 years. The UK now faces soaring inflation rates and cost of living expenses.

The Bank of England has warned that this will result in the UK economy being plunged into a recession for more than a year this autumn as the rising energy prices push inflation above 13%.

The Bank also forecasts that the combined five quarters of economic contraction, a 5% fall in real-terms living standards, and increased interest rates by 0.5 percentage points will result in the largest single inflation rate rise in 28 years.

The Bank’s baseline forecast is also forecasting the GDP (Gross Domestic Product) to fall by 1.25% in 2023 and 0.25% in 2024. This will show the first example of two years of annual economic contraction since the 1960s.

The Bank’s Monetary Policy committee voted 8-1 to increase the base rate to 1.75% as an attempt to prevent the inflationary impact of soaring energy prices being compounded by domestic price and wage pressures. 

The interest rate increase will add around £650 to annual mortgage repayments for those with an average tracker mortgage. Monthly tracker repayments for homeowners have been increasing since interest rates began rising from 0.1% last December (2021) at around £170.

This relentlessly cruel inflation rate which now is going to be the highest since September 1980, is being driven by the ever increasing cost of wholesale gas on the international markets. This has doubled since May and is now on course to treble domestic energy bills.

This is a cost that the poorest and most vulnerable will not be able to meet.

The Bank also believes that the domestic energy price cap is expected to reach £3,500 per household in October. This will push the inflation rate to peak at 13.3% in the fourth quarter of this year and is also expected to remain above 10% until the middle of next year. 

However the Inflation rates are also forecasted to fall back slightly to 9.5% in the third quarter and 5.5% by the end of the 2023.

The domestic energy price cap is sadly expected to increase again when the energy regulator Ofgem will review the costs in January. The MPC (Marginal Propensity to Consume) believes that the inflationary impact will be offset by falls in other areas. It has also said that the goods price inflation costs may have peaked but commodity prices are already beginning to fall back.

Real living standards are forecasted to fall by 1.5% this year and 2.25% next year, with a 5% decline. This includes the direct government support payments of at least £400 per-bill payer. These payments don’t even scratch the surface of the real life devastating impact of increasing energy costs that less well off people are already facing.

A five-quarter recession which will end in the first quarter of 2024 would be very similar in length to the financial downturns of 2007-08 and also the early 1990s and early 1980s. However this won’t be as deep as the previous financial crisis with a predicted decline in GDP of 2.1%.

The Bank’s Monetary Policy Committee have also stated that the ever increasing energy prices are responsible for the majority of the rise in inflation, but also keep in mind the continued COVID supply chain disruption is still playing a significant factor in rising costs.

The MPC is also forecasting that wages will rise by 6% this year but has also warned that as the recession starts to take hold unemployment will probably begin to rise next year from the current 3.8% sending it to peak at 5.5%.

The explanation given by the MPC is as follows: “The United Kingdom is now projected to enter a recession from the fourth quarter of this year. Real household post-tax income is projected to fall sharply in 2022 and 2023 while consumption turns negative.”

“The labour market remains tight, and domestic cost and price pressures are elevated. There is a risk that a longer period of externally generated price inflation will lead to more enduring domestic price and wage pressures.

“In view of these considerations, the Committee voted to increase the Bank Rate by 0.5 percentage points, to 1.75%.”

Personal finance expert Gemma Godfrey is quoted as saying on Sky News

“The Bank of England had a “tough challenge” when it came to trying to control inflation and it was a “war on all fronts”.

She said: “The Bank of England has a really tough challenge where they’re trying to control inflation, but they don’t want to tip us into recession. 

“So what we’ve been hearing for the past few months is that our economy has been slowing down. We’re not spending as much. Companies aren’t selling as much. And that obviously risks jobs. 

“But obviously, everybody is aware that our everyday living costs are rising. They’re set to rise by more than five times as much as the target the Bank of England sets.

“And it’s a war on all fronts, it’s food, it’s energy, people are really struggling. So the Bank of England will try and increase rates to try and slow this down.

“But there’s calls that they’ve been too slow or they’re being too aggressive. It’s a very tough balancing act for the many millions of families around the UK.”

Responding to the Bank of England’s announcement today, Labours shadow chancellor Ms Reeves said Tory leadership candidates were “touring the country” and announcing unworkable policies that would not help people get through the cost of living crisis. 

She said: “This is further proof that the Conservatives have lost control of the economy, with skyrocketing inflation set to continue, while mortgage and borrowing rates continue to rise. 

“Labour would help households right now by removing the tax breaks that are subsidising oil and gas producers and using that money to help people now, including by cutting VAT on energy bills.”

Meanwhile The Labour Party have failed to commit to lowering energy costs.

Conservative former chancellor Ken Clarke has warned of a “very unpleasant” winter for many households in the country.

Lord Clarke of Nottingham told the BBC: “Nothing is certain, but I’ve thought for some time we faced the risk of an extremely serious recession.”

“This winter is certainly going to be very unpleasant for many households in the country and I think it’s absolutely inevitable the Bank of England acted as it did.”

“I’d have been rather alarmed if they hadn’t put it up by at least 0.5%. I think the Monetary Policy Committee probably considered 0.75%… but decided in the present circumstances that that was too fast.

“They’ve taken the right decision and they’re going to have to do it again as the year goes on.”

Meanwhile this leaves the average person facing spiralling cost of living expenses and dramatically increasing energy costs whilst receiving little or no adequate financial help or support.

Without adequate financial help the UK will undoubtably face thousands of vulnerable people suffering or worse as the poorest always pay the highest cost for these increasing prices.

Action needs to be taken now to prevent these possible deaths by tackling OFGEM and their refusal to challenge the energy companies.

There isn’t a person with compassion that can think that it’s ok for energy companies to profit in such a manner whilst people face a long, bleak winter with no sight of help or relief.

However with the Conservative Party and probable future prime minister Liz Truss at the helm of the country, they will undoubtably find a way to profit from this situation whilst ignoring the scale of the energy and cost of living crisis that the UK is facing.