Flattening the curve leads to steepened spending, as May 2020 Exchequer returns reveal €6.1billion deficit

Jun 08, 2020

Ireland’s latest Fiscal Monitor for May 2020 has shown that an Exchequer deficit of over €6.1 billion was recorded to end-May 2020, as compared to a deficit of €63 million in May last year. As the disease curve flattens, the report indicates that COVID-19 public spending continues to rise, with an increase of 19 per cent or €4.175 billion in predicted spending.

The Exchequer returns also shows the current resilience of corporation tax receipts to the overall economic slowdown as receipts amounted to €2.5 billion. Tax revenues in May 2020 were up 1.3 per cent as compared to May 2019, owing to an increase in corporation tax receipts of €1.2 billion.

The top five key takeaways of the report are:

  1. An Exchequer deficit of over €6.1 billion was recorded to end-May 2020.
  2. Total net voted expenditure, was ahead by over €4 million or 19 per cent, mainly in response to COVID-19, particularly in the areas of health and social protection
  3. Corporation tax receipts amounted to €2.5 billion, with an increase of €1.2 billion since May 2019
  4. Income tax fell 7.8 per cent or by €137 million, and PRSI receipts declined by close to 16 per cent in May
  5. VAT and Excise receipts fell by 35 per cent and 36 per cent year-on-year respectively, or nearly €1 billion combined due to a decline in consumption

 

Touching upon the Government’s main COVID-19 schemes, Minister for Finance and Public Expenditure and Reform Paschal Donohoe reiterated that the Pandemic Unemployment Payment will continue beyond the planned closure date. Minister Donohoe also said the Temporary Wage Subsidy Scheme will not be disappearing overnight, and any decision on that will try to get the balance right between unwinding the scheme and keeping jobs that are dependent on it.