DUBLIN – Ireland will extend its COVID-19 wage subsidy scheme into the second quarter of 2022 as part of Tuesday’s budget announcement, which will also meet a key public finance target a year ahead of schedule, a source familiar with the process told Reuters.
Ministers have so far said the subsidy would be extended beyond the current end date of December, but not by how long.
The scheme will be phased out over a period with the exact completion date to be announced on Tuesday, the source said.
The government plans to use its budget for 2022 to offset sharp cost-of-living increases with some tax cuts, a rise to the old age pension, childcare subsidies and assistance for those struggling to pay their fuel bills, while also ensuring a rapid economic recovery further reduces the budget deficit.
The 4.7 billion euro package – which will also significantly boost capital spending, particularly in housing supply – will leave Ireland with a budget deficit of 1.7% to 1.8% of gross domestic product (GDP) next year, the source added.
The finance ministry on Saturday cut its budget deficit forecast for 2021 to 3.1% of GDP from a forecast it made three months ago of 5.1% thanks to lower-than-expected spending and strong tax receipts and economic growth.
That will mean that the government’s goal of only borrowing for capital purposes, which was due to be met in 2023, will instead be reached in 2022, the source said.