The Department of Finance published its Budget 2021 forecasts in early October. The forecasts predicted a 2.5 percent fall in GDP in 2020, with minimal recovery (1.4 percent) in 2021. Unemployment is predicted to fall 13.8 percent this year, with limited recovery (7 percent or 145,000 jobs) expected in 2021.

The domestic economy has been severely hit by COVID-19, although the impact on GDP is less than had been expected in the Spring, mainly due to the strong performance and contribution of the multinational sector. Modified domestic demand, which was described as “perhaps the best indicator of domestic economic conditions”, is projected to fall by 6.5 percent in 2020.

These macroeconomic forecasts, that will underpin Budget 2021, assume that:

1. trade between the UK and the EU will be on WTO terms, due to a disorderly end to the Brexit transition period; and
2. a widespread vaccination for Covid-19 vaccine will not be available.

Minister for Finance, Paschal Donohoe said that the Budget will prioritise management of the COVID-19 crisis and Brexit, with any further measures targeted at the three priorities in the Programme for Government – health, housing and climate change.