UK Sluggish, Ireland Strong: Post-Brexit Divergence in Economic Fortunes
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The UK's economic growth remains sluggish after Brexit, while its public finances are under pressure from low growth and relatively high debt. This contrasts with strong growth and budget surpluses in Ireland.
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The UK tax burden is set to rise to its highest levels in years, while public spending is facing real cuts. This makes fiscal conditions difficult for the next UK government.
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Irish economic growth is forecast to be much stronger than the UK's in 2023, aided by high state investment and spending. However, Ireland's reliance on volatile corporate tax revenue poses a risk.
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UK living standards per capita are not forecast to recover to pre-pandemic levels until 2027/28 due to low growth and rising taxes squeezing incomes.
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The UK's high debt interest costs compare unfavorably to Ireland's, where most debt is at fixed rates. This gives Ireland more fiscal flexibility.