Finance Minister Brian Cowen TD yesterday outlined the economic importance of investing in R&D in Ireland’s manufacturing and other productive sectors. In his Budget 2007 measures he said the Government spending on science technology and innovation will be increased from €800m this year to €900m in 2007.
He recognised investment in R&D as a critical factor in sustaining Ireland’s industrial future and as a result said he was enhancing the existing R&D tax credit for firms.
“Investment in R&D is a key factor in retaining our manufacturing base. The special R&D tax credit seeks to encourage this and the changes I am making will further incentivise firms to engage in R&D,” Minister Cowen said.
He said that improvements to Ireland’s R&D tax credits will cost €70m in a full year and will complement the €200m increase in spending on science, technology and innovation.
Cowen went on to say that this year’s Budget enhances enterprise innovation and rewards work by reducing the overall tax burden.
Setting out the economic context he said that the Irish economy will grow by over 5pc in 2007 and that 72,000 jobs will be created next year, representing a 3.5pc increase in the numbers at work.
He said that unemployment will remain low at 4.4pc, among the lowest in the EU. Inflation he added would moderate from 2.7pc on average to 2.6pc in 2007.
However, there are risks. He cited a possible sharper than expected downturn of the US economy next year, a slower growth rate than forecast for Europe, further European Central Bank rate increases and “the ever present unpredictability of oil prices”.
He said there were also domestic risks of losing competitiveness and from unbalanced economic growth.
By John Kennedy