Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Deputy for raising this question. It is absolutely the case that the pandemic has had a dramatic impact on the public finances, first and foremost on the people we serve, including the 470,000 people on the pandemic unemployment payment, many of whom have remained out of work for almost a year since they lost their jobs in March 2020. Our number one priority and challenge will be to rebuild the economy and bring about a recovery that is focused on helping people to get back to work.

There was a question on the deficit. The preliminary estimate for last year, as committee members know, is of a deficit of €19 billion and a forecast we made in the budget for 2021 is of a deficit of a similar order or slightly higher at over €20 billion. The truth is that we are in a period of such uncertainty that it is difficult to make predictions.

We need to consider in the coming weeks how we approach the stability programme update. As committee members know, we must prepare and submit that statement to the European Commission by the end of April. I imagine there will be engagement with the committee as part of that process. We will have the summer economic statement in the summer as well. We made provision in the budget for the contingency fund and for the recovery fund. Those two are being used currently to sustain the supports currently in place in the form of the pandemic unemployment payment, the employment wage subsidy scheme, the Covid-19 restrictions support scheme and so on. Those funds will come under strain as we move through the coming months depending on the level of the public health restrictions.

In overall terms, last year we spent €85 billion. The forecast this year that we set out in the budget was for expenditure of approximately €88 billion over the course of the year. The commitment we have given is that we will maintain the supports as long as is necessary and there will not be a cliff edge. We are not going to allow them to end abruptly.

Recently, I had a good meeting with the National Treasury Management Agency to get an overall handle on the work officials there are doing in managing the national debt. I was convinced following the engagement that they are taking maximum advantage of the current borrowing conditions, which are extraordinary because of the support of the European Central Bank. As committee members know, the ECB has committed to continuing with the exceptional bond buying programme up to March 2022.

At this point the focus of the Government is on supporting people and businesses and getting everyone through this in the best way possible. Our assessment is that the bulk of the heavy lifting in respect of the deficit can be achieved through growth, trying to repair the economy and bringing about that recovery. I am not going to suggest for one moment that it will be plain sailing right through the full term of Government. It would be foolish to make such a commitment. Anyway, our focus is on continuing with the supports and bringing about the recovery. A reduction of the deficit will be done gradually. It will be led by growth and by helping people to get back to work.

I believe the Irish economy has the capacity to rebound strongly when we consider the level of savings. Over €15 billion in extra savings has been amassed in our financial institutions in the past year. I believe the economy will start to recover in the second half of this year. All the forecasts from the main bodies internationally and domestically are for growth of between 4% and 5% next year. Now, we cannot take anything for granted but I believe if we can help to ensure that businesses get through this period, then that money is well spent in general terms. We will keep the supports under review. We are doing a good deal and we will see what further work we can do or need to do. When it comes to the reopening phase of the economy there will be a need to try to give extra help to businesses, some of which may have been unable to open their doors for the past 12 months or more by that time. There will be damage and legacy issues will need careful consideration. We will work with people on that basis, but the commitment I can give is that our focus will be on bringing about recovery. That is the best way to address the deficit, which will need to be addressed over time.