I propose to take Questions Nos. 216, 218 to 222, inclusive, 229 and 230 together.
The medium term expenditure strategy to 2025 was set out in the Summer Economic Statement (SES) and detailed further in the Mid-Year Expenditure Report. This strategy aims to meet key challenges facing us in the short to medium term and reflects the Government’s commitment to return the public finances to a more sustainable position; address our infrastructure challenges including in the key areas of housing and climate action; continue to enhance our public services and social supports; and ensure a balanced recovery from the pandemic. This will see core expenditure grow year by just over 5 per cent on average, in line with the trend growth rate of the economy, over the period to 2025 while providing for the careful phased withdrawal of Covid-19 related supports.
Potential reductions in corporation tax income as a result of the reforms to global corporation tax policy currently under discussion have been accounted for to the extent possible within this, with the revenue projections set out by the Department of Finance estimating a shortfall in receipts of €2 billion by 2025 compared to current tax policies remaining in place.
Discussions are currently underway on the allocation of resources as part of Budget 2022, within the parameters agreed by Government in the SES. This will see overall gross expenditure of €88.2 billion next year, including increased spending of €4.2 billion within the core expenditure ceiling of €80.1 billion. Of this additional spending, €1.1 will be increased investment under the National Development Plan, with €2.1 billion to meet the costs of maintaining existing levels of service and €1 billion to fund priority new expenditure measures.
Provision to meet the continued challenges posed by Covid-19, and by Brexit, has been included in spending projections for next year with temporary spending of €7 billion provided for in respect of Covid-19 related measures and the €1.1 billion Brexit Adjustment Reserve.
For 2021 spending, as per the end of August Fiscal Monitor overall gross expenditure was under profile by 3%. The Department of Social Protection showed the only overspend against profile, and this related to Covid-19 income and employment support schemes as the extension of the PUP and EWSS post end-June under the Economic Recovery Plan has not yet been included in profiles.
Given the significant level of resources to be provided under the medium term expenditure strategy, an ongoing and enhanced focus on value for money is required, including adherence to public expenditure guidelines, and we must ensure that there is the capacity to deliver this significant level of investment and build on the budgetary reforms already in place to drive spending efficiency and effectiveness.