21st June 2016

Increased Commitment to Capital Expenditure Welcomed, But More Will Be Needed – ‘Rainy Day Fund’ Positive Step in Prudential Economic Management

Following the Government’s announcement of the Summer Economic Statement, Chambers Ireland Chief Executive, Ian Talbot welcomed the increased commitment to capital expenditure but cautioned that further investment increases are likely to be necessary in the coming years.

“Increased Government spending should be weighted towards strategic investment in the infrastructure necessary to sustain our economic growth. A lengthy period of under investment in infrastructure has led to bottlenecks emerging, particularly in transport, housing and broadband and these areas need substantial investment as a matter of urgency.  We welcome the increased allocation of €1 billion to the capital investment programme over the coming years and the commitment to bring levels of capital expenditure up to 3.8% of GNP by 2021. However, as Ireland faces increasing demographic pressures, and the economy moves towards operating at capacity, it is very likely that further increases to the capital budget will be necessary. ”

“The establishment of a Rainy Day Fund is another positive development which will help address the vulnerability of the Irish economy to cyclical shocks. As a small open economy, a Rainy Day Fund will provide a prudential counter-cyclical buffer to help smooth income and expenditure profiles in times of volatility.”

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