Covid-19 hits Exchequer returns as consumer spending slumps and Government spending rises

Covid-19 hits Exchequer returns as consumer spending slumps and Government spending rises

Minister for Finance Paschal Donohoe, and Minister for Public Expenditure and Reform Michael McGrath. File Picture: Sasko Lazarov/Rollingnews.ie

The Exchequer deficit was €9.5bn up to the end of August.

VAT receipts are down by more than €2.5bn on the same period last year.

The Department of Finance said it reflects the significant reduced personal consumer spending in the spring.

The Government's total tax take is down 2.3% or just over €800m on last year.

Government spending was up almost a third on the same time last year, at €43.2bn.

The Minister for Finance, Paschal Donohoe said the returns confirm the scale of the cost of fighting the coronavirus pandemic. 

He said: "The Exchequer deficit to end-August reflects the unprecedented increase in public expenditure as a result of the Government’s support for our health service and the wider economy through this crisis. 

"Although there are some positive developments – most notably in income tax receipts – a considerable and unprecedented amount of uncertainty remains. 

"A deficit of this magnitude underlines the extent of the challenge we face — once the economy recovers — in placing the public finances on a sustainable trajectory.’ 

The  Minister for Public Expenditure and Reform, Michael McGrath said the country’s finances have been under enormous pressure due to Covid-19. 

He said: "We have faced an extraordinary set of circumstances and have increased spending, particularly in the areas of Health, Social Protection and Business to protect public health and to support the incomes of those whose livelihoods have been devastated by this pandemic. 

"The expenditure figures for August also reflect the drawdown of additional funding to support the reopening of schools. 

"People have shown great resilience during this crisis and we will continue to do everything we can to help businesses and to keep people in work."

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