Budget to include Covid and Brexit fund of up to €5bn

Business aid, hospitality VAT of 9% and PUP changes among measures expected

The recovery fund will be worth between €4 billion and €5 billion, and be aimed at businesses and sectors hit by the pandemic and those impacted by Brexit over the coming year. Photograph: Gareth Chaney/Collins

A multibillion-euro stimulus fund to bolster the economy from the fallout of both Covid-19 and Brexit is to be one of the key planks of the Government’s budget on Tuesday.

The recovery fund is anticipated to be worth between €4 billion and €5 billion, with the final figure still uncertain as work to finalise Budget 2021 continued over the weekend. It will be aimed at supporting businesses and sectors which have been hit by the pandemic and those impacted by Brexit over the coming year, a senior Government source said.

A separate compensation scheme for businesses required to close under Covid-19 restrictions will also be announced, with weekly or monthly payments to assist them to stay afloat.

Health budget

It is also expected the VAT rate for the hospitality sector will be cut from 13.5 per cent to 9 per cent, in a boost for the struggling industry. While anticipated changes to the pandemic unemployment payment will allow self-employed workers earn a certain amount and still qualify for the payment.

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The budget this week will also set out significant increases in health spending aimed at meeting on-going costs associated with the Covid-19 pandemic and to building capacity in hospitals.

There will be about €1.6 billion allocated for new developments including additional beds and staff as well new funding for mental health. There will also be additional funding for home care packages to keep people out of hospitals.

Minister for Health Stephen Donnelly has also signalled he wants to make investment in maternity services and in implementing other health development blueprints such as the trauma strategy next year.

Additional funding to keep open for next year about 800 beds which were funded temporarily during the first wave of the pandemic is expected to be provided along with funding for about 500 other beds which were promised as part of the government’s winter plan for the health service.

The budget will also cover the provision of about 130 sub acute beds, 600 rehabilitation beds and over 500 community beds.

There will also be more money for additional intensive care beds. The HSE said at the weekend it was looking at the provision of about 20 additional beds in intensive care units next year and 125 more in 2022 to bring the total up to about 450.

The health service is expected to take on several thousand additional staff including the first tranche of the 1,000 additional hospital consultants promised by the then Government last December to be appointed over a decade to treat public patients only.

The health budget is expected to rise from the €17.4 billion earmarked originally last year to about €21 billion this year. However in reality about €2 billion more was provided this year than envisaged initially to meet with the costs of Covid-19.

Included in the new health budget will be about €1.3 billion to pay for testing and tracing for Covid- 19 and to meet the cost of procuring personal protective equipment.

Tusla, the child and family agency, is expected to receive a budget increase of close to €50 million, and an additional €100 million is to be provided across the disability budget.

There will also be an increase in funding for the direct provision system, to improve existing accommodation conditions for asylum seekers.

Jack Power

Jack Power

Jack Power is acting Europe Correspondent of The Irish Times

Martin Wall

Martin Wall

Martin Wall is the former Washington Correspondent of The Irish Times. He was previously industry correspondent