July stimulus package to feature another €750m in capital spending

'One or two matters remain outstanding' when it comes to agreeing the July stimulus, but a massive spend on capital projects is set to be announced.
July stimulus package to feature another €750m in capital spending

Tánaiste Leo Varadkar arrives for a Cabinet meeting in Dublin Castle yesterday evening. Picture: Leah Farrell/RollingNews.ie

Up to €750m in additional capital spending will be included in Thursday’s €6bn+ July stimulus package, it is understood.

The Cabinet sub-committee on economic recovery, chaired by Tánaiste Leo Varadkar, met yesterday to seek to finalise the deal, but sources said that “one or two matters remain outstanding”.

Issues around the phasing out of the pandemic unemployment payment (PUP) and the phased extension of the temporary wage subsidy scheme were among the items discussed, it is understood.

Public expenditure minister Michael McGrath has said that, as a result, the total spend on capital projects this year will rise to €8.9bn.

It has been confirmed that:

  • The Department of Agriculture, Food and Marine has received an additional €20.4m for a number of different measures;
  • The largest increase is for the Department of Business, Enterprise and Innovation, which received nearly €500m. This funded the Sustaining Enterprise fund operated by IDA Ireland and Enterprise Ireland;
  • There is an additional €250m for the Restart grant scheme;
  • The Department of Children and Youth Affairs received €14m for capital grants.

A total of €220m for additional capital funding was allocated to the Department of Health for infrastructure and capacity expansion, including ICT investment. These are the overall numbers.

In the Dáil, the Taoiseach confirmed that the budget deficit will be €30bn and not the €23bn previously believed, but insisted the stimulus package is about helping workers and not banks.

Micheál Martin said we will have a €30bn deficit at the end of this year because of the enormous expenditure on health, and that expenditure on health will continue through 2021.

“The stimulus is not about big business and banks, but about workers,” he said.

"I am sure Deputy Richard Boyd Barrett wants workers' jobs to be preserved and livelihoods to be improved."

Government sources have confirmed that more than €6bn — split between straight expenditure for grants and stimulus, tax rebates, and the credit guarantee scheme — had already been agreed.

The Government’s plan to offer some form of VAT reduction or rebate to consumers from September, as revealed by the Irish Examiner, has been criticised.

Waiting until September to introduce a staycation subsidy will be too little, too late for the Irish tourism sector, according to Labour’s Mark Wall.

“There are 250,000 people employed in the tourism sector, and last year tourism was worth €9.4bn to the Irish economy," he said. 

"That figure is expected to drop by at least 75% this year with virtually no foreign tourists expected to travel to Ireland.”

The package will also see the €350 top rate of the Covid-19 pandemic unemployment payment (PUP) cut by €50 a week in the autumn.

As revealed by the Irish Examiner, a phased reduction of the PUP will be included in the delayed stimulus plan for boosting the economy and returning people to work.

The stimulus plan — or mini-budget — is geared at pumping cash into the tourism and hospitality sectors, which are among the worst affected by the lockdown.

It is understood the rate will stay at €350 a week for the remainder of the summer, but then start to be reduced over around nine months until it reaches the €203-a-week level of the current jobseekers' allowance.

 

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