For the first time since the introduction of the Summer Economic Statement (SES) ritual amid Brexit uncertainty a decade ago, the Government is entering budget preparations without a clear view of the resources available next year.

When presenting the document on Tuesday, Minister for Finance Paschal Donohoe acknowledged that it was based on a “no-tariff scenario”. “Depending on what happens in the next weeks, we will reassess where we are,” he said.

His public expenditure colleague Jack Chambers added: “If there is a serious economic deterioration, we absolutely will have to revisit what we’re saying here today to be responsible.”

Two days later, Ireland formed part of the overwhelming majority of EU member states adopting a package of countermeasures targeting €93 billion worth of US imports to Europe in case no deal is struck with the Trump administration on tariffs.

Crucially for this country, the European retaliation would impose customs duties on aircraft and aircraft parts, hitting Boeing’s customers among the thriving Irish aviation industry.

Amid this uncertainty, the Government added the self-imposed challenge of committing to over €100 billion of capital expenditure over the next five years under the National Development Plan – although the NDP’s new format, expressed in monetary terms for each department with priority projects to be identified later in the year, leaves some room for backtracking. 

If a full-blown trade war does erupt with the US, it will be easier in the coming months to admit that a certain amount won’t, in the end, be spent on health or education infrastructure rather than cancelling a hospital or school development in any particular constituency.

Colm singled out Metrolink as one of the rare pieces of infrastructure copper-fastened in the plan – albeit without anyone yet knowing how much it will cost.

“Ruling nothing out”

The SES provides for a budget package of €9.4 billion, split between €2 billion in increased capital spending, €5.9 billion in additional current expenditure, and €1.5 billion in tax cuts.

Ministers led by Taoiseach Micheál Martin have spent most of the past week insisting that the capital portion would remain untouched no matter what. “We’re not anticipating having to borrow, but we’re ruling nothing out,” Martin said.

With this much clarified, I asked Donohoe how much of the current spending and tax cuts he was planning to axe in the budget if the outlook deteriorated, and in what order – before engaging in borrowing. “It’s not a question that I or anybody else can answer,” he said.

Donohoe referred to the previous Department of Finance forecast published in April’s Annual Progress Report, which modelled the impact of a 10 per cent US tariff scenario on the Irish economy. This is the current level of duty imposed provisionally on EU goods by the Trump administration, pending the August 1 negotiations deadline.

The department’s 10-per-cent-tariff scenario sees growth in GDP, domestic demand and employment reduced by a small amount this year and a much more substantial drop of one third to 40 per cent across these indicators in 2026. 

This scenario does not provide any estimate of the impact of such a slowdown on the State’s coffers, but the rest of the Annual Progress Report roughly links a 10 per cent cut to the GDP growth rate with a €1 billion loss of tax revenue. 

The transatlantic trade environment is now heading towards a multiple of this figure. And this doesn’t take into account potential EU retaliation.

I wrote previously that the current structure of Ireland’s multinational-dependent corporation tax bonanza was solid, especially after the so-called “big beautiful bill” US legislation cemented it.

This remains true, and a large part of this trade is unaffected by tariffs: When Apple sells Chinese-made iPhones to Germans via Ireland, or Microsoft provides cloud software to Italian companies from Dublin, it is precisely to shield themselves from adverse decisions by US tax authorities. This will continue.

The real fiscal risk, aside from the impact on targeted industries like pharma (€4 billion in corporation tax last year, off a trade that was 40 per cent directed to the US), aviation, and whiskey manufacturing, lies in a general deterioration of the economic climate on both sides of the Atlantic resulting from an escalating trade war.

Already, industrial giants like carmakers Stellantis and Volkswagen are reporting multi-hundred-million losses to tariffs. A generalised slump is what would really dampen the trade that flows – and is taxed – through Ireland.

Until this becomes clearer, any discussion of the share of tax cuts to be allocated to a hospitality Vat reduction or otherwise in Budget 2026 is futile. It’s all taking place in a virtual fiscal space that may or may not exist.

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Elsewhere this week, Brighid obtained the first detailed interview ever given by Paddy Doherty, who rose from incredibly humble beginnings in Co Donegal to found the successful Electro Automation Group and is now making his mark on the Dublin hospitality scene. Her article stretching from Dalkey to Malin Head is an odyssey in itself.

Alice chronicled the three-day hearing into the planning dispute over Statkraft’s Coolglass onshore wind farm before the Supreme Court, which will decide how much importance the State’s legal commitments to climate targets will take in the regulation of development. She also interviewed Tina Raleigh, the head of a separate Statkraft unit planning an offshore wind farm in the Irish Sea.

Ripples from the debt accumulated by Paddy McKillen Jr’s businesses continued to be felt as the company operating 12 bars and restaurants in his former Press Up group, rebranded as Eclective since lender Cheyne Capital took control, moved slowly through examinership. Francesca had the details. Meanwhile, receivers to three properties used as serviced offices under McKillen Jr’s Grafter brand have enlisted rival Iconic Offices to manage them on a temporary basis. Tom and I had an update on this batch of receiverships before yet another one emerged.

The lengthy trial of bloodstock billionaire John Magnier’s claim over the Barne Estate in Co Tipperary continued, including dramatic testimony by one of the beneficiaries of the trust attempting to sell the property to rival bidder Maurice Regan instead, Alexandra Thomson-Moore. Francesca was in the High Court.