Economic snapshot likely to be positive ahead of Omicron effect

Exchequer returns, unemployment and national accounts due out this week

Shoppers on Grafton Street. Photograph: Gareth Chaney/Collins

Shoppers on Grafton Street. Photograph: Gareth Chaney/Collins

 

We’ll get a strong read on how the Irish economy is performing this week with exchequer returns, unemployment and national account data out on Wednesday and Friday.

November is the most important month of the year for tax. It’s simultaneously the biggest month for corporation tax, typically one of the biggest for VAT while it also reflects self-employed tax returns from October, the annual deadline. It usually accounts for a sixth of all receipts.

The Government’s tax haul continues to be boosted by the performance of corporation tax, which generated €9.5 billion for the 10-month period to the end of October, €2 billion above profile. The business tax is expected to generate a record €13.9 billion this year.

Income tax and VAT receipts linked to a rapid recovery in employment and consumption are also running ahead of estimates. Unemployment fell to a pandemic low of 7.9 per cent last month, down from 20 per cent in October last year and it’s expected to register another fall in November.

The latest national accounts from the Central Statistics Office on Friday will almost certainly detail a significant jump in output in the third quarter as it coincided with the reopening of the economy in May and June and the subsequent surge in spending and activity.

The three sets of data are likely to detail an economy in rebound. They predate the emergence of the Omicron variant and the possibility that the strain could result in renewed disruption, over and above that from the recent rise in cases.

As the World Health Organisation has noted, the emergence of the variant serves a reminder that “Covid-19 is not done with us”. Addressing a special session of the World Health Assembly, WHO director general Dr Tedros Adhanom Ghebreyesus, warned that “hard-won gains could vanish in an instant”.

The latter point is surely being felt across the hospitality industry, which is now subject to a raft of Christmas event cancellations. This is likely to temper the rebound in activity we’re seen in recent months.