November 28 2022 | Simon Miller
November Highlight reel
This article is written by Simon Miller, who has over 20 years’ experience in financial journalism and is currently the Senior Financial Editor at nudge. US gives thanks for worsening data.
Today Minister for Finance Paschal Donohoe announced the 2021 Budget and it’s the largest on record for Ireland - €17.75 billion. The total value of support measures to date amounts to €24.5 billion, nearly eight times last year’s Budget plan.
Mr Donohoe began his address by inspiring the nation, he said: "The test we face, further demanding challenges await. The challenge is great and yet we will prevail, from the ashes of this pandemic together we will build a stronger and more resilient Ireland."
He said that the Budget is completely unpinned by the continued presence of the virus and the absence of a vaccine. Hence a significant investment in health, social welfare, education, housing and business support. There are no notable changes to income tax bands or tax credits, but there are a few adjustments to consider.
An extra €4 billion for the health service. This will include investment in Covid protection, extra beds, dementia and care home support, drugs rehabilitation, disability and mental health support. Including:
There will be a new Covid support scheme to provide targeted support for businesses temporarily closed, due to the pandemic, will get a maximum of €5,000 per week. The Government will make a payment based on their 2019 average weekly turnover. Other business support programmes include:
There is €8.5 billion to support people, families, communities and businesses to survive the challenge of Covid, with a Contingency Reserve of €2.1 billion to support public services and income support. This means increases of:
The Department of Education will have an €8.9bn budget with €80 million extra for school buildings and €270m for Higher Education building projects. €2bn will be put towards children with special education needs and 900 additional SNAs and 403 additional teachers. Other support measures include:
€5.2 billion will be allocated to the Department of Housing, that’s an increase of €773 million from 2020. Mr McGrath said it was a “record level of funding”. Other investments include:
Full-time workers on the minimum wage will remain outside the top rate of USC (Universal Social Charge), the ceiling of the second USC rate band will be increased to €20,484 to €20,687. There will be no broad changes to income tax credits or bands, and the 12.5% corporation tax rate remains in place. Changes to Vehicle Registration Tax (VRT) based on emissions to incentivise people to buy low emission cars. There are also changes to:
Much like Covid, another assumption that underpins the budget is no trade deal between the EU and the UK. €340 million voted expenditure will be spent on Brexit support in 2021. This includes an additional allocation for compliance expenditure in 2021.This means:
We hope you’ve found this overview of Ireland’s Budget 2021 useful. If you want a full report of the Financial Statements made by Minister Donohoe and Minister McGrath, there are resources at the bottom of this article.
Conclusions and closing remarks
Michael McGrath, Minister for Public Expenditure and Reform said he and Mr Donohoe wanted to give people hope based on realism. He said, “The day will come when Covid-19 and Brexit are behind us. A new economy, a green economy will emerge, and so too will a greater understanding of how much we rely on each other and so will a greater appreciation of the simple things that perhaps we often took for granted."
Here are some resources we used to build this article: