Two-thirds of Government’s €13bn Covid spend in 2020 went on income supports

CSO figures provide detailed breakdown of Government’s pandemic spending

The impact of Covid restrictions played heavily on the Government’s finances last year. Photograph: Dara Mac Dónaill

The impact of Covid restrictions played heavily on the Government’s finances last year. Photograph: Dara Mac Dónaill

 

Two-thirds of the Government’s €13.1 billion Covid spend last year went on income supports, according to new figures from the Central Statistics Office (CSO).

The pandemic unemployment payment (PUP) accounted for €5 billion, while the temporary wage subsidy scheme, which later morphed into the employment wage subsidy scheme, accounted for €3.8 billion. The additional spending on health came to €2 billion.

The Government also spent €600 million on restart grants for businesses, while €200 million was spent on the Covid restrictions support scheme (CRSS), which provides working capital to businesses unable to trade fully during the restrictions.

The Government spent €800 million on IT services related to the pandemic.

The figures, provided as part of the Government’s annual financial statistics, show the general government deficit last year – the difference between what it spends and what it generates in taxes – was €18.4 billion, or 5 per cent of GDP (gross domestic product). This is compared with a surplus of €1.8 billion in 2019.

The deficit was driven by a combination of increased expenditure and declining tax revenue.

Tax revenues

Overall tax revenues were down €2.5 billion, or 3.9 per cent, on the previous year. There was a fall of 12.5 per cent in indirect taxes, mainly due to reduced VAT receipts and the waiving of commercial rates, compared with a rise of 2.6 per cent in direct taxes (including corporation tax and income taxes).

The resilience of income and corporate tax last year has been highlighted in recent exchequer numbers.

The significant increase of €16.7 billion (19.1 per cent ) in Government expenditure in 2020 was due to Covid-19 measures, the CSO said.

The State’s Covid bill is expected to be in the region of €32 billion by the end of this year. While Minister for Finance Paschal Donohoe has repeatedly promised there will be “no premature withdrawal of budgetary support”, it is clear that a period of retrenchment is inevitable.

The Department of Finance has predicted a strong bounce in consumer spending at the end of this year and into next, which will help improve the Government’s deficit metrics.