The Irish Government has unveiled an 18 billion euro budget package based on the premise the country's fight against coronavirus will last throughout 2021.
The major uplift in public spending includes 8.5 billion euro to help public services impacted by the virus and 3.4 billion on a recovery fund to stimulate growth and employment as the country weathers the combined storm of coronavirus and Brexit.
Finance minister Paschal Donohoe told the Dáil parliament the pandemic represented the biggest challenge the state had faced since independence a century ago.
"We have faced numerous difficulties since independence, but never one like Covid-19; an invisible enemy that has caused great suffering, and disrupted so much of what is central to our well-being," he said.
"Equally, we meet this enemy with greater determination, resolve and resources than ever before in our history."
Mr Donohoe said the budget was based on the assumption a vaccine would not become widely available next year.
"We will prevail," the Fine Gael minister insisted. "We will come through this. And from the ashes of the pandemic, together, we will build a stronger, more resilient Ireland."
"Once again this year, Budget 2021 is framed on the basis of no bilateral trade deal between the EU and the UK. My department estimates that the absence of such a deal will reduce Irish growth by just under 3 percentage points in 2021, with expected growth of 1¾ per cent.
"Looking to the final months of 2020, GDP is projected to decline by 2½ per cent for the year.
"The unemployment rate is expected to decline slowly throughout the second half of the year, reaching 12¼ per cent in the fourth quarter, with an annual average rate of just under 16 per cent.
"My department is forecasting a total loss of approximately 320,000 jobs in 2020, with this recovering by approximately 155,000 jobs next year.
"This year’s deficit will bring our overall national debt levels to just under €219 billion or almost 108 per cent of national income.
"I am announcing a total budgetary package of over €17¾ billion, more than €17 billion of which relates to expenditure, and €270 million in taxation measures. This package is unprecedented in both size and scale in the history of the Irish State. The impact of this Budget will be felt in every household and business across the country.
"Of the nearly €18 billion:
"€8 ½ billion is for our public services to address the challenges of COVID-19, including €2.1 billion in contingency funding;
"€3.8 billion will be spent on supporting existing services across a range of departments, in particular the Department of Health;
"expenditure on core capital programmes is to increase by €1.6 billion next year;
"€3.4 billion will establish a Recovery Fund to stimulate demand and employment.
"As committed to in the Programme for Government, I am announcing the establishment of a Recovery Fund worth €3.4 billion. This will provide significant additional resources to fund additional government decisions next year.
"The Employment Wage Subsidy Scheme is currently set to continue until 31st March 2021, however, a similar type scheme will be needed out to the end of 2021 to provide businesses with greater levels of certainty, in the most uncertain of times.
"In relation to VAT, as part of the July Stimulus I announced a reduction in the standard rate of VAT from 23 per cent to 21 per cent for the period 1st September 2020 to 28th February 2021.
"In recognition of the unprecedented challenges facing particular sectors of the economy, I am announcing a reduced VAT rate for the hospitality and tourism sector from 13 ½ per cent to 9 per cent with effect from 1st November 2020.
"I have chosen to introduce this at the earliest possible moment to allow those businesses that are currently open to benefit. I am putting this reduced rate in place until December 2021 in order to provide significant additional support to businesses next year." ■