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Ireland’s new budget for 2021 will be presented today by Finance Minister Paschal Donohoe

DUBLIN: Finance Minister Paschal Donohoe will present today the new budget for 2021. This will be the largest budget package in the history of Ireland.

The government is now forecasting a deficit of 21 billion euros or 6% of national revenue this year.

During last year’s budget announcement, the finance minister said the country’s economic situation should be kept in mind due to the possibility of a non-deal breakthrough. But the new budget comes after a year amidst pressure from the Covid pandemic.

The new budget will be tailored to the long-term economic situation of the country due to Covid restrictions and to provide support to those who have lost their jobs due to Covid.

Minister Donohoe had said earlier that this time around there will be a very large deficit compared to the previous year.

The total budget package is estimated to be around €20 billion. In that €14.5 billion had already been committed to expenditure resulting from the support of Covid-19 and other policy decisions taken in previous years.

What to expect from the budget?

The budget will include details of a recovery fund, mainly to deal with the current Covid impact.

In addition to Brexit and Covid, health, housing and climate change will also be important in the budget.

The government expects additional costs of up to €9 billion next year for Covid. Public Expenditure Minister Michael McGrath presented a memo on spending strategy in the Cabinet ahead of the budget last week.

His proposal was to spend about 900 million euros in addition to the current one billion euros to meet existing services in all sectors.

He added that this would increase capital expenditure by one billion euros in the next financial year. The budget will also decide on the utilization of the Rainy Day Fund, which can be used in emergencies.


Health will take a large portion of the Budget day package. It has already agreed to spend €1.6bn on new measures such as beds and staff, and $ 4 billion on additional costs, including €2bn for Covid measures.

Income tax

Minister Donohoe said there will be no increase in income tax in the 2021 budget.

The program for the government will not increase the Universal Social Charge (USC) either, but there may be some changes in the bands.

At the same time, the hospitality sector had demanded more concessions on VAT in connection with the epidemic.

Although the government has withdrawn from this in recent times, perhaps the delegates have put considerable pressure on the budget to get it approved.

Social welfare

In the wake of the Covid epidemic, the government has made unprecedented spending on health and social welfare. There may be other big announcements for the Covid defense in Tuesday’s budget.

Covid may also announce additional support in the budget for those working in the worst-affected areas.

The government is also under pressure to help many people in the areas of hospitality, tourism, entertainment and the arts.


The Budget may also announce further assistance to the worst-affected areas of the No Deal Brexit.

There will also be more announcements about stimulus loans and grant schemes.


It is expected to expand Ireland’s housing assistance scheme, which offers tax breaks of up to €30,000 for first-time home buyers. Housing Minister Darragh O’Brien had earlier expressed interest in expanding the project.

Community housing is also an important part of the budget.

The government had planned to launch a low-cost housing scheme last month and announcements will be made in the budget.


Carers can expect something extra this time, maybe an increase of €150 per year.

Living Alone Allowance

There may also be an extra €5 per week for Living Alone Allowance recipients.

Pandemic Unemployment Payment (PUP) and the Wage Subsidy Scheme (EWSS)

As restrictions intensified across the country, the government is under considerable pressure to restore PUP payment levels to their pre-cut amounts.

The Government may commit to pushing the expiry dates for both the PUP and EWSS out further beyond the spring, to give people dependent on the supports more certainty.

Changes may also be made to encourage self-employed individuals to receive a certain amount without having to give up the PUP in its entirety.

Christmas Bonus

All welfare recipients are expected to receive a one-week Christmas bonus. It covers those in receipt of the PUP, given that they have been providing it for at least four months.

Carbon Tax

The carbon tax was raised by six euros per tonne last year as part of a drive to promote green enterprises. So there will be an increase again today.

Funds will also be set aside for retrofitting homes for energy efficiency.

At the same time, petrol and diesel prices may go up.

The government has also decided to spend one million euros a day to improve cycling and walking infrastructure.

Grants may be allocated in the budget to charging points, renewable energy and retrofit schemes to promote electric vehicles.

Fuel Allowance

An increase in the Fuel Allowance is likely to help the vulnerable groups and the elderly, with €3.50 more being suggested.


It is expected that there will be significant changes in the Vehicle Registration Tax to discourage people from buying large diesel cars and to go green with electric vehicles.

Cigarettes & Alcohol

Cigarette prices may be announced in the budget. However, queries remain as to whether there will be an increase in the price of alcohol.


It seems likely that the temporary lowering of the VAT rate from 23% to 21% will be permitted to expire as expected at the end of February.

However, it also looks likely that the VAT rate for the hospitality sector will be cut to 9% from 13.5% for a period, as it was a few years ago.

Business Assistance

It is expected to announce funding of up to €3.4bn for businesses, large and small, facing financial crisis as a result of the COVID-19 pandemic and a possible no-trade deal Brexit.

Entertainment sector

Today’s budget also has the potential to introduce a major live music and entertainment package in the range of €10 million. Venues would receive a minimum grant of €10,000.

Employment agencies

Employment creation agencies, such as the IDA and Enterprise Ireland can expect extra funding.


An increase of 15,000 retraining places in further and higher education is expected particularly targeted at young people, where the unemployment rate has rocketed in recent months.


License renewal fees may be waived and improvements could be made to the scrappage scheme to help taxi drivers.

Parental Leave

Up to 3 weeks extra optional paid parental leave is also on the table.


Up to 400 special needs teachers and 1,000 special needs assistants could be hired.


The plan is to recruit 600 new guards and 500 guards by 2021. There may also be funding for the purchase of 70 new vehicles as the Garda relied on rental cars during the Covid outbreak.

Anyway, we will know in full when the Finance Minister announces the budget at 1 pm today.

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