Ireland’s new coalition government unveiled its first Budget in Dublin today, spending heavily with borrowed money to combat the pandemic’s economic damage, and the threat of a no-deal Brexit.
The total package of €17.75 billion (£16.1bn), described by the country’s finance minister Paschal Donohoe as “unprecedented in its size and scale” and the largest in the country’s history, will include a €3.4bn national recovery fund to tackle the two main threats.
An extra €4bn will be given to the country’s health system to continue tackling the pandemic, including the provision of extra beds, PPE and testing.
Image: Hospitality will benefit from a VAT cut through 2021 but that will not help Dublin’s drink-only bars yet as they remain closed
Mr Donohoe told the Dail (Irish parliament), sitting in the Convention Centre Dublin for social distancing reasons, that Budget 2021 was framed on the assumption that there would be no trade deal between the UK and the EU, and that there would be no “broadly available” COVID-19 vaccine in the coming year.
The stark nature of his message was underlined by a forecast for a deficit of €20.5bn for 2020, along with the loss of 320,000 jobs by the end of the year, although the government expects a recovery of some 155,000 jobs in 2021.
The staggering cost of the pandemic was underlined when the minister said the total value of COVID-19 support measures so far amounted to €24.5bn.
Among the main Budget 2021 measures:
- A €3.4bn recovery fund
- An extra €4bn for the health service
- An extension of Ireland’s COVID wage subsidy scheme for employees
- A new support scheme for businesses closed by coronavirus restrictions
- No changes to income tax
- VAT for the hard-hit hospitality sector will be reduced from 13.5% to 9% from 1 November
- Carbon tax to increase by €7.50 per tonne a year
- Petrol and diesel duties will increase
- A pack of cigarettes increased by 50 cents taking the cost to €14
Image: Ireland has enforced some of the toughest coronavirus restrictions in Europe to limit the pressure on its hospitals
There were no major surprises in the budget, much of which had been widely flagged in advance.
Mr Donohoe said that Ireland would prevail, and closed his speech with a quote from the poet Seamus Heaney: “If we winter this out, we can summer anywhere.”