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Government records €9.5 billion budget deficit on foot of Covid-19 spending

The figure compares to a deficit of €625m recorded in the same period last year.

Image: Shutterstock/Gena96

THE GOVERNMENT RECORDED a €9.5bn deficit at the end of August, latest figures from the Exchequer show.

The figure compares to a deficit of €625m recorded up to the same point last year, with the additional €8.8bn this year mostly attributed to increases in government spending.

According to the Department of Finance, the increase in spending reflects the response to the Covid-19 pandemic, particularly from the Department of Health and the Department of Employment Affairs and Social Protection.

There has been an increase in overall government spending of 28% or €9.5 billion compared with the same period in 2019.

Exchequer figures also show that tax revenue to the end of August was also down by 2.3%, or €802 million, on the same period last year.

VAT receipts to end of August were down by over €2.1 billion, or 21% per cent on the same period in 2019. And excise receipts fell by 15%, or €579 million.

However, tax revenues were similar in the month of August compared to the same month last year, down by €11m or 0.4% year-on-year.

This was due to a strong economic performance in January and February, as well as an increase in corporate tax receipts.

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Minister for Finance Paschal Donohoe said the figures confirm the scale of the cost of fighting the Covid-19 pandemic.

“The Exchequer deficit to end-August reflects the unprecedented increase in public expenditure as a result of the Government’s support for our health service and the wider economy through this crisis,” he said.

“Although there are some positive developments – most notably in income tax receipts – a considerable and unprecedented amount of uncertainty remains.”

He added that the deficit underlined the extent of the economic challenge faced by Ireland.

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