Dáil Éireann Debate, Tuesday - 15 June 2021
90. Deputy Peadar Tóibín asked the Minister for Finance his views on the fact that while EU fiscal rules limit Government deficits to 3% of GDP and a debt of 60% of Ireland’s GDP, the 2020 budget deficit here was 6%; and if he will make a statement on the matter. [20479/21]
View answerAs the Deputy will be aware, in March 2020 the General Escape Clause (GEC) of the EU’s Stability and Growth Pact was activated for the first time. The clause’s activation temporarily suspends the regular application of the EU fiscal rules, to allow Member States to take all necessary expenditure and taxation measures to combat the spread of the virus.
While the activation of the GEC means the regular fiscal requirements have been temporarily suspended, it must be noted that the Pact itself has not been suspended or revoked but remains in place, providing an important anchor for fiscal policy over the medium-term. As part of the recent announcement by the European Commission of its 2021 Spring Package, the Commission confirmed that the General Escape Clause of the Pact will remain in force in 2022, and is expected to be de-activated in 2023.
As set out in the Stability Programme Update (SPU), published by my Department in April, Ireland recorded a General Government deficit of 5 per cent of GDP in 2020. This figure reflects the extraordinary nature of the fiscal measures put in place to support Ireland’s fight against the pandemic. Substantial additional expenditure has been allocated by Government to provide the necessary resources to our health service, and to support workers and businesses through the crisis with policies including the Pandemic Unemployment Payment and Employment Wage Subsidy Scheme.
A multi-annual path for the public finances will be set out in the forthcoming Summer Economic Statement, including a medium-term fiscal target. This reflects the priority which the Government places on ensuring that the public finances return to broad balance over the medium-term as economic activity recovers, tax revenues increase and the exceptional policy measures taken to combat the pandemic are unwound.
