By Kenneth Fox
The 2021 Budget will be based on the assumption that there will be a ‘disorderly Brexit’, according to Finance Minister Pascal Donohue
Earlier today, Mr Donohoe and the Minister for Public Expenditure and Reform, Michael McGrath announced the government’s overall strategy for next year’s budget.
They said it will focus on providing further support to the economy and decisions will “prioritise crisis management – addressing the fall-out from the Covid-19 pandemic.”
Mr Donohoe said “We will base the budget on the assumption of a disorderly Brexit and there will also be no broad increases in income taxation.”
They said the government will publish a medium-term plan in the spring outlining how they will balance the budget, when there is more certainty.
They decided their overall strategy will be to “balance the need to continue to provide counter-cyclical support to the economy while ensuring that the public finances remain on a sustainable path.”
They confirmed that Budget 2021 will be centered around the following tenets:
- From the beginning of next year, bilateral trade between the UK and the EU will be on World Trade Organisation terms
- In the absence of a vaccine, the economy – and broader society – must co-exist with the virus.
- As per the programme for government, the sectoral priorities will be health, housing and climate change.
- ‘A Recovery Fund’ will be established and the details and mechanics of this will be provided on Budget day.
They said the fund will be needed to ensure continued support for the economy and that decisions regarding the fund will be made across the year.
Commenting on this strategy, Mr Donohoe said: “Budget 2021 is being formulated against the background of continued economic, financial and wider societal fall-out from the Covid-19 pandemic and against the threat of a disorderly ending of the transition period which governs bilateral trade between the EU and UK.
“With limited resources available, the priority of the forthcoming Budget must be to provide support to those areas most in need’.
“Government has acted decisively this year to counteract the worst effects of the pandemic, with support measures of around €24.5 billion provided to date. Put simply, this level of support is unprecedented, and has been appropriate given the scale of the economic shock.”
Reflecting on the significant expenditure response to the Covid-19, Minister McGrath said:
“Government has introduced a series of critically important expenditure measures to support our households and businesses from the unprecedented shock of Covid-19.
“The Health service has been provided with the funding to implement the necessary measures to respond to the public health crisis with further funding to be made available deliver the 2020 Winter Initiative.”