The Committee on Budgetary Oversight met with Minister for Finance, Paschal Donohoe TD, in late April to discuss the draft Stability Programme Update (SPU). The SPU outlines the medium-terms macro-economic and fiscal forecast and effectively outlines the medium-term budgetary strategy.

In his opening statement, the Minister discussed:

• that the cost of the Government’s pandemic response continues to be significant, while both appropriate and necessary;
• the speed of economic recovery in the medium term is dependent on the success of the vaccination programme;
• the release of pent-up demand will be a key driver of the economy in the near term;
• the level of employment is expected to increase by 80,000 this year and 250,000 next year, with employment levels expected to remain below pre-crisis peak until 2023;
• the level of domestic activity is expected to be lower by the end of the projection period than the level suggested by the pre-pandemic trend, with employment lagging also; and
• how beyond 2022, all Covid supports are assumed to have been unwound.

In relation to risks, the Minister emphasised that the outlook remains highly uncertain and that there is a possibility that international corporate tax reform could weigh more heavily on revenue streams than assumed. That aside, economic recovery and the withdrawal of Covid supports are expected to be sufficient to align revenue with expenditure by 2025.

Stability Programme Update 2021 was submitted to the European Council and Commission in accordance with legal guidelines on Friday, 30 April 2021.