LATEST Budget 2021: Finance Minister says new package will prevent recession from turning into 'a prolonged depression'
Finance Minister Paschal Donohoe has said the new budget package announced today will ensure the recession does "not turn into a prolonged depression."
Speaking at the Convention Centre in Dublin today, the Minister said the country has faced numerous difficulties since independence but never one like Covid-19.
He said this time last year, Brexit was the main challenge facing Ireland, but said the pandemic has become an even bigger threat.
He described it as "an invisible enemy that has caused great suffering."
The Fine Gael Minister said the total value of support measures to date amounts to €24.5 billion, nearly eight times last year’s budget plan.
He said Ireland had never responded to a challenge like this in modern times but equally the country had never delivered “such a strong response”.
Ireland’s 2021 budget has been framed on two major assumptions: a no-deal Brexit and the continued fight against the coronavirus.
Mr Donohoe said he is anticipating there will be no bilateral trade deal between the UK and the EU, which will reduce Irish growth by an estimated 3pc, to 1.75pc.
It is also assumed that the coronavirus pandemic will continue in Ireland next year, and the absence of a widely available vaccine.
GDP is projected to decline by 2.5pc for 2020 as a whole, with domestic demand falling by 6pc.
The Department of Finance is forecasting a total loss of 320,000 jobs in 2020, with an estimated 155,000 jobs to be recovered next year.
Mr Donohoe said a deficit of €21.5 billion euros, or 6.2pc, is currently projected for 2020.
While he said this was a “huge figure” by Irish standards, it was similar to what other countries were borrowing.
“What is crucial is making sure that any deficit remains a manageable deficit,” he added.
Budget 2021 forecasts a deficit of 20.5 billion euros or 5.7pc.
He also announced the Government will utilise the 2.5 billion euro Rainy Day Fund.
Ireland’s deficit for 2020 remains unclear amid the possibility of further lockdown measures before the end of the year.
Mr Donohoe said the exact figures remain unclear “even at this late stage” because of the possibility of “further containment measures being implemented”.
He said there are limits to the amount of borrowing that would be prudent for the Government to undertake.
“We must manage and reduce our borrowing levels over the coming years to move our national finances back to a balanced position, and to remain well inside Eurozone levels of borrowing,” he added.
Building employment will be “key to reducing our deficit and managing our debt”, the Minister said.