Compliance officers say Budget must be 'cautionary'

By John Mulligan, Irish Independent, published 01/10/20

More than half of compliance officers in financial institutions across Ireland believe the upcoming Budget should be a cautionary one, but 39pc say it should be expansionary, with tax cuts and spending commitments, according to a recent survey.

The survey of almost 300 members of the Association of Compliance Officers of Ireland (ACOI), found that 35pc of them believe the implications of Brexit and Covid-19 will have an equal impact on their businesses in 2021.

The surveyed members are primarily employed at large financial services firms around the country.

Michael Kavanagh, chief executive of the ACOI, said this month's Budget for 2021 will be a "landmark" budget for the country.

"At the beginning of this year, the Government expected to spend somewhere around €70bn, but the latest figures suggest we are actually heading towards €86bn," he said, adding that the country faces into the Budget with a significant deficit.

"Unlike the recession of 2008, the Government cannot use austerity as the tool with which to address the deficit caused by the pandemic," said Mr Kavanagh.

While the more than a third of respondents see Brexit and Covid as equal dual threats, 11pc said Brexit is the single biggest threat facing their businesses in 2021.

At the moment, it appears that a hard Brexit is on the cards for January, when the UK's transition period from its former EU membership ends.

But Mr Kavanagh said a study from the Economic and Social Research Institute suggests that it's unlikely that the financial services sector would suffer a double blow from the coronavirus outbreak and Brexit, because the pandemic hasn't hit the sector as badly as others.

"However, this is a sector that could potentially be highly exposed to a hard Brexit," he said.

"So perhaps, based on this, firms should be cautious not to become overly focused on Covid to the detriment of their Brexit preparations."

The ACOI survey found that 74pc of members support cutting the rate of capital gains tax from 33pc to 20pc.

"Whatever way Government goes about compensating for the damage done to the Exchequer by Covid and preparing for the disruption by Brexit, it's clear that new approaches need to be taken in order to try stabilise job losses and safeguard the economy," said Mr Kavanagh.

The Echo