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Exchequer Returns

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.

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.

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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