Budget latest: €3.4bn recovery fund available even in level 5 lockdown scenario

Minister for Finance Paschal Donohoe (right) and Minister for Public Expenditure and Reform Michael McGrath. Picture: Julien Behal 

Finance minister Paschal Donohoe says Ireland's €3.4bn recovery fund will be available even if the country goes to another level 5 lockdown.

Mr Donohoe and Public Expenditure Minister Michael McGrath announced the largest budget in the history of the State today.

Mr Donohoe said the 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."

Mr Donohoe said the Employee Wage Subsidy Scheme, due to expire on March 31, would be extended in some form but did not offer specifics on its replacement. He said that the full details of the replacement would not be made until early 2021.

"It's important that we give some certainty to employers that the scheme will continue beyond March. We've given absolute certainty for at least five months, but we are going to have to get into 2021 before we can give an indication regarding what the continuation will look like."

Mr Donohoe said that a "minority of car owners" will see their car tax go up, saying that he understood that many would not be able to move directly to an electric or hybrid vehicle. He said that he hoped that in that case, they would move to a less polluting vehicle.

Minister Donohoe called the Budget the "largest investment in the history of the State", saying that it came at a time when it was most needed. He said that he was satisfied that the level of borrowing that will be in place in 2021 was justified.

He added that this was "the first step towards reducing our deficit". 

He said that his ambition was to "get back to a position of broad balance" over the coming years, but he could not say when the country might be running a surplus once again.

Minister McGrath said that the borrowing which Ireland was undertaking over the next two years would be "hugely significant" adding that he was aware of the "realities" that the money would have to be paid back and that the Government "can't add €20 billion to the national debt every year".