THE RECOVERY FUND will be used to extend existing support measures or roll out new funding if the Covid-19 situation either does not improve or gets worse next year. 

In his Budget speech yesterday, Finance Minister Paschal Donohoe said that €2.1 billion in contingency funding was being put aside for next year, with another €3.4 earmarked for a Recovery Fund to stimulate demand and employment in the context of Covid-19 and Brexit.

Speaking to reporters last night, the minister said the €3.4bn recovery fund will be available even if the country goes to another Level 5 lockdown.

This year’s budget was drafted on the assumption that a vaccine will not be broadly available next year.  

Donohoe said the recovery fund, which is designed to protect the country from the dual threats of Covid and a hard Brexit, would operate “independently of public health restrictions”.

There is a scenario where Ireland’s economy contracts again in 2021 but the fund would be available no matter what, he said.

“The Recovery Fund is independent of whatever public health guidance is in place for 2021. It is obviously the strong hope that we are successful with the efforts against the disease, but that regardless of where we are in the public health guidance, that figure will be available. Minister McGrath and I will make recommendations to the government on how and when to spend that figure.

“In one scenario, if the disease were to continue to spread, growth would be down 1% this year and 4% next year,” he said.

Public Expenditure Minister Michael McGrath said the €2 billion in contingency for health and social welfare is separate to the €3.4 billion recovery funding.

“That will be used to meet the emerging needs in the economy, that is very much about supporting the economy through next year, whether it be to used to extend existing schemes. 

Looking towards 2021, both ministers said it is a year where lots could change. 

Both said this money is needed in case measures such as the wage subsidy and Pandemic Unemployment Payment (PUP) need to be extended next year.

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Speaking yesterday, Tánaiste Leo Varadkar said this money is because we cannot predict what will happen with Covid-19 and that there may be a “third wave” of the virus, 

“The reason why we set aside €2 billion in contingency for health and social welfare and €3.4 billion and contingency for Covid and Brexit is that we don’t know what’s going to happen with the pandemic,” he said.

We don’t know when the second wave will end, it will end. We don’t know if there’ll be a third wave and when it will start, how long it might go on for. So we have to be in a position, if needs be, when we look at this again in November around the time when we have the national economic plan done, and in the new year, to make decisions. 

Varadkar said that the government will have to examine if schemes such as the Pandemic Unemployment Payment, the wage subsidy scheme and the new Covid Restrictions Support Scheme (CRSS) would be extended beyond the current March date. 

Opposition TDs hit out against the government for not providing certainty to workers, with many stating that the carbon tax was an attack on rural Ireland. 

Ministers Paschal Donohoe and Michael McGrath will be in the hot seat in RTÉ Radio One this morning for the traditional post-Budget day Q&A where the ministers answer questions from listeners.