Dáil Éireann Debate, Tuesday - 21 September 2021
219. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied that Ireland along with its European colleagues continues on a positive trajectory in terms of fiscal policy; and if he will make a statement on the matter. [45165/21]
View answerWe approach Budget 2022 in a much better position than we were this time last year. The economy has recovered rapidly, with the vaccination programme proving extraordinarily successful. However, there will, of course, be long-term effects from the pandemic, particularly in terms of employment.
The most recent Exchequer returns showed a deficit of €6.7 billion was recorded to the end of August this year. This represents an improvement on the same period last year, of some €2.8 billion, although on a 12-month rolling basis, the deficit stands at €9.5 billion.
The year-on-year improvement is primarily down to an increase in tax revenue. Taxes to the end of August are €2 billion over profile, with income tax, corporation tax and VAT performing particularly strongly. On the expenditure side, gross voted expenditure is behind profile by €1.7 billion, although slightly ahead of the same period last year.
A general government deficit of approximately €20 billion, or just over 5 per cent of GDP, was projected in the Summer Economic Statement . Given the over-performance in tax, it is likely that the actual deficit will be lower than this. A revised deficit forecast will be produced as part of Budget 2022.
The fiscal picture in the European Union as a whole is also improving, as the worst impacts of the pandemic recede. In relation to economic growth, the EU Commission forecast GDP growth of 4.8% in 2021 and 4.5% in 2022, both in the EU and the Euro Area. A significant driver of the recovery as been the support shown by EU institutions, most notably via Next Generation EU funding mechanisms and the unprecedented support of the European Central Bank.
