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'Unprecedented' Budget 2021: Record health investment expected as Taoiseach promises help to fight Covid-19

The budget has been prepared in the shadow of the coronavirus pandemic and the expectation that a no-deal Brexit will take place in 2021.

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Finance Minister Paschal Donohoe (Brian Lawless/PA)

Finance Minister Paschal Donohoe (Brian Lawless/PA)

Finance Minister Paschal Donohoe (Brian Lawless/PA)

Ireland’s health service is set for an unprecedented level of investment when budget 2021 is announced later.

Finance Minister Paschal Donohoe will announce next year’s budget from the convention centre in Dublin.

The budget has been prepared in the shadow of the coronavirus pandemic and the expectation that a no-deal Brexit will take place in 2021.

Despite these challenges, Mr Donohoe said he believed the state’s finances are strong enough to respond and “help us look forward to a better day”.

This year Ireland’s health budget was estimated at a record-breaking 20.3 billion euro – with an increase of four billion euro being mooted for next year.

Taoiseach Micheal Martin has signalled a record increase as the country continues to battle Covid-19.

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Taoiseach Micheal Martin has promised an ‘unprecedented level of resources’ for the Irish health service (Julien Behal/PA)

Taoiseach Micheal Martin has promised an ‘unprecedented level of resources’ for the Irish health service (Julien Behal/PA)

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Taoiseach Micheal Martin has promised an ‘unprecedented level of resources’ for the Irish health service (Julien Behal/PA)

Speaking on Friday he said: “An unprecedented level of resources have been allocated to the health services, both in the winter plan and throughout the entirety of 2021.”

Mr Donohoe has said Ireland faces a pre-budget deficit of 21 billion euro – although this is lower than the 30 billion euro deficit predicted earlier this year.

“This would be the equivalent of approximately 6% of national income,” Mr Donohoe said last week.

“For next year we anticipate a pre-budget deficit of 14.5 billion euro if there were no policy changes, this is the equivalent of just over 4% of GDP.”

Mr Donohoe emphasised these figures were subject to “an unprecedented degree of uncertainty with potential further change within 2020 and clearly the potential for significant change in 2021”.

But he has consistently ruled out the prospect of income tax hikes in 2021.

He said recently: “Our personal tax receipts are holding up quite well, and in terms of what that says about our economy, it does indicate to me that momentum is building in our economy.”

But increases to the carbon tax are anticipated, with the programme for Government committing to increasing the levy by 7.50 euro per tonne in every budget until 2029.

Last year’s budget increased the levy by six euro per tonne for 2020.

There were also discussions on Monday about extending the social welfare Christmas bonus to recipients of the pandemic unemployment payment (PUP).

A reduction of the VAT rate for the hospitality sector from 13.5% to 9% is also being considered.

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