Bumper €18bn budget to weather Covid-19 and Brexit storms

The Government hopes the measures announced yesterday will help Ireland combat the combined storms of the Brexit coronavirus pandemic 

The Government is pinning its hopes that a €17.7bn budget day giveaway will be enough to buttress the country from the perfect storm of the Covid-19 pandemic until the end of 2021.

However, there is a realisation that should further restrictions be required in the coming weeks, the basis of yesterday’s budget will be undermined.

With a further 811 Covid-19 cases notified by the National Public Health Emergency Team (NPHET) yesterday, there are fears of a move to level four lockdown in the days ahead. 

The huge expansion in public spending includes €8.5 billion 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.

Speaking exclusively to the Irish Examiner, Taoiseach Michéal Martin said the budget “goes some way” to address the devastating impact of the pandemic.

He rejected criticism that the Budget offers little for working people.

“The investment in health and education and housing is for working people. And for people who currently can't get a house or wait for a long time for a house.

"That's the whole idea to get really substantial resources in behind those fundamental and issues,” he said.

“Every single penny of the carbon tax will go back to the people in the form of social protection payments and additional fuel allowance, but also towards retrofitting houses and enabling, which will make them more energy-efficient, and that will give greater value and into the future,” Mr Martin said.

Recap: Budget 2021 - The main points

The standout initiative of Budget 2021 is the new Covid Response Support Scheme (CRSS) which will provide up to €5,000 a week to businesses forced to close by Covid restrictions.

Finance Minister, Paschal Donohoe said the payments would be given to businesses in counties where level 3 restrictions have been announced.

Mr Donohoe said that 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. 

Finance Minister, Paschal Donohoe. Picture: Julien Behal

He said that the full details of the replacement would not be made until early 2021.

The hospitality sector has also welcomed a reduction in the VAT rate 13.5% to 9% which will come into force from the start of next month.

A €50m package to help support the live entertainment sector and €2m for major sporting events are among the measures also announced in Budget 2021.

The cost of a pack of 20 cigarettes increased by 50c at midnight while petrol and diesel have also gone up after the carbon tax was hiked by €7.50 a tonne. 

Meanwhile, the Green Party has put their stamp on Budget 2021 with €1m a day for cycling and walking; a massive home retrofitting project and a scheme to encourage farmers to reduce carbon while increasing biodiversity.

Mr Donohoe said that a "minority of car owners" will see their motor tax go up but said that the plan was to encourage people to look at less polluting vehicles going forward.

Leading economist Seamus Coffey, a former chair of the Irish Fiscal Advisory Council, has warned that a new version of the Pandemic Unemployment Payment (PUP) may need to be rolled out under any new tough lockdown of the economy.

Mr Donohoe said the Recovery Fund is independent of whatever public health guidance is in place for 2021.

The opposition criticised the budget on the main issues from February's election, health, housing and inequality.

Sinn Féin's Pearse Doherty said that the Government has left people "vulnerable" while signing off a super junior Minister's a pay rise of more than €17,000 and cut the pandemic unemployment payment (PUP).