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THE GOVERNMENT HAS said it has the “firepower” to support the economy throughout 2021 despite the Department of Finance reporting an overall deficit of €19 billion for 2020.
The deficit is compared to a pre-pandemic predicted surplus for the year of €2.5 billion and is largely due to the government’s spending on Covid-19 supports.
Overall government spending last year increased by €13.7 billion, or 25%, with health and social protection the biggest areas of expenditure.
Tax revenues overall were down by €2.1 billion, or 3.6%, on 2019.
VAT receipts were down by 18% on 2019 as public health restrictions impacted consumer spending with corporation tax the only major tax to record an increase.
Finance Minister Paschal Donohoe said however that the rate of increase in corporate taxes would “begin to decline” throughout this year.
The government had previously outlined that its budgetary plans would be based on the assumption of no deal Brexit and Donohoe said today that the Brexit deal would help with financial planning.
“If you look at where we are overall, we have avoided the worst challenges in relation to Brexit, so that is a very important improvement on the outlook for the year,” he said.
It’s clear of course that we continue to have really great challenges in dealing with the disease but if you look at the two funds in their entirety, and if you look at how we’ve been able to support the economy in 2020, I do believe that initiatives that we announced on budget day will be sufficient to support the economy through to recovery in 2021.
Minister for Public Expenditure and Reform Michael McGrath said there are sufficient financial resources available for this year.
“If you look at the amount of we have actually allocated to departments, through the votes in terms of Covid, it’s of the order of €6.5 billion and then when you add the contingency fund of €2 billion and recovery fund of €3.4 billion there is provision there as such for exceptional type spending of the order of €12 billion.”
“I would agree with Minister Donohoe that we believe at this point that the envelope we have provided gives us the firepower to support the economy over the course of 2021.”
Speaking to reporters, the ministers also said the current PUP rates and the wage subsidy scheme won’t change in the near term and that a review would not take place until the current Level 5 restrictions are eased.
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They must have found that magic money tree, they accused the Shinners of having.
@Tommy Berry: It’s either that or they rehired the leprechaun.
@David Corrigan: F.F. Have plenty experience of how to run an country’s coffers dry. They don’t know what a balanced budget is.
@Tommy Berry: No we have the lowest bond yields ever because of prudent financial management over the last 10 years.Today the Ntma sold 4 billion 10 year bonds at -.27% interest So that means we get paid 1.1 million a year from them to mind their money. In 2010 we were heading towards 14% and being refused money everywhere
@Tommy Berry: In 1833 the British government borrowed £20 million on the bond market to pay slaveholders compensation when slavery was abolished that year. In 2015, David Cameron finally paid off the descendants of those bondholders. That’s what governments do.
We can borrow, as we did today, at negative rates and we are being encouraged to do by the ECB as is the rest of the EU. It may be centuries if ever before these loans have to be repaid.
@Tommy Berry: it’s called borrowing at low interest rates most probably helped by not defaulting on our previous bailouts
That’s what that really expensive printer is for.
Just keep printing…
@Eddie Michael: and how come they could have all those families in emergency accommodation because they did not have the money to house them?
Must be using Michael Noonan’s bung money!
@Sean Reddin: they checked down the back of Ray Burke’s couch
Get the banks to bail us out…….Its their turn now.
Amazing what can be done by central banks when they put their minds to it.
Sure the working class not better bunch to pay it back
I hate it when they say a Minister is confident. That’s usually when the trouble starts..
November all we heard was vaccine on the way, vaccine on the way, vaccine on the way.
Well, keep paying the PUP and business supports now and roll out the vaccines and we all get our lives back.
@longstrides: if you think that is what this “vaccine” will do . you’re in for a long wait
@ed w: I take the bait. What will this “vaccine” do?
@Vanessa: on its own, not much. But, in combination with 5G Bill Gates will be able to play you like a PS5. That’s what the new third hand is for – an antenna for the 5G for superior gameplay.
@Brian Ó Dálaigh: Probably is some of those bad Dr Who plots they do recently.
In the budget the government said that the cost of Covid for the country was 16.5 billion from March to October.
Eight months or thereabouts.
In the budget it projected that the cost of Covid on the country for the year to October 2021 would be 8.5 billion.
About half of what it cost for the eight months from March to October gone past.
All of which suggests that the government expects the pandemic to last for four months from November 2020.
Which would be February 2021.
Not long to go now thank God.
Now, why didn’t you take the Apple off the tree when you and the other twits had your chance.
Really? Can you believe these charlatans, we will pay for this like the bank bailout, a Covid 19 charge.
All the views on the story below yet this one and it’s ongoing ramifications will be the biggest killer
have your say