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Fianna Fáil’s McGrath signals budget battles ahead

Party finance spokesman criticises Donohoe for locking into budget package figure of €2.8 billion

Michael McGrath firmly stated his party’s political philosophy in the Dáil last night

Good morning.

Yesterday saw the publication of the summer economic statement, with Minister for Finance Paschal Donohoe saying a budget-day package of €2.8 billion - with €700 million available for new spending - will be available to him on October 8th, deal or no-deal Brexit. The Government will, however, allow the State finances swing from a surplus to a deficit if the UK crashes out of the EU without a deal.

Our lead on it is here , while analysis from Eoin Burke-Kennedy, who says Brexit is allowing the Government avoid the pressing domestic policy issues of housing and health, is here.

Donohoe, Taoiseach Leo Varadkar and others gave heavy signals yesterday that tax cuts will be off the agenda if there is a no-deal Brexit, with Government sources also privately acknowledging the usual €5 welfare increases are also unlikely in such a scenario.


Leading figures on the Government and Fianna Fáil benches said the summer statement figures - particularly the effect running a deficit for the next few years in the event of no deal would have on the national debt - are stark.

Those in Government acknowledged no deal would mean a number of tight years, while some in Fianna Fáil privately suggested it could lead to a series of neutral, or almost neutral budgets, in the years ahead.

Yet some differences were discernible between the confidence-and-supply partners, facing their last budget before the election, during Dáil exchanges on the summer statement last night.

Michael McGrath, the Fianna Fáil finance spokesman, criticised the Minister for committing to the figure of €2.8 billion, saying he is “not sure that it is wise to lock into that budgetary strategy right now”.

“I do not see that it is necessary, as much can change in the coming months,” McGrath said. “I hope the Minister will come back on the amount of resources he will have in play to do anything tangible to support the sectors we all accept will need special supports in the event of a no-deal Brexit.”

It was something of a difference from last year, when McGrath largely agreed with the figures provided by Donohoe in the summer statement, a move that foreshadowed the extension of the confidence-and-supply deal.

The Cork South Central TD yesterday said political stability is needed in the period ahead to pass a budget, and senior figures in Fine Gael and Fianna Fáil agree a budget must be passed if the new British prime minister triggers a Brexit crisis in the autumn.

But it was notable that McGrath firmly stated his party’s political philosophy in the Dáil last night.

“Apart from the economic backdrop, which must be accounted for, the other core priority must be protecting our citizens and ensuring that those basic services are in place when they need them,” he said, citing home care and health in particular. “They are under serious strain now.

“The Minister cannot do everything. He cannot promise a €2.3 billion tax cut and deliver on the full capital programme despite the overruns that are there and, at the same time, protect vital public services,” McGrath said.

“Decisions will have to be made against the benchmark, as far as we are concerned, of what are our values, what are our priorities as a country and who are we seeking to protect. For me, this is the key issue.”

This time last year, Varadkar was polling strongly following the passage of the referendum on the Eighth Amendment. and many in his party were itching for a general election. Fianna Fáil, bruised after divisions opened within its ranks during that referendum campaign, wanted to stop one.

A year on, Varadkar has been worn down by government. Fianna Fáil has been buoyed by a successful local, if not European, elections, and a new confidence runs through the party.

Fianna Fáil will not push for an election - Micheál Martin will not do anything to undermine the trust in his party he has spent years painstakingly rebuilding - yet it may push for more of what it wants in the final budget before the election.

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