Consumers and businesses have "adapted" to transacting online during the current Level 5 lockdown, Minister for Finance Paschal Donohoe said after a rise in income tax and VAT receipts helped limit the huge expansion of the State's fiscal deficit.
Exchequer returns published on Tuesday showed a deficit of €4.172 billion for the three months to the end of March, up from €2.5 billion last year. Tax receipts were up 1 per cent despite the ongoing lockdown, and spending up 14 per cent to €19.5 billion.
VAT receipts rose 8.4 per cent, or €350 million, while income tax receipts were up 4 per cent.
Hospital Report
Consumer ‘resilience’
Mr Donohoe said the figures highlighted the “resilience” of consumers and the labour market. “Real-time” data on consumer behaviour suggests the current Level 5 lockdown is having only about half the negative impact on consumer spending that the first shutdown did in 2020, the Government indicated.
The exchequer figures were released hours after an update from the Central Statistics Office showed more than a quarter of the Republic's entire workforce was out of work last month.
The total number either on the Live Register or in receipt of the pandemic unemployment payment (PUP) stood at 617,441 in March, down just 37,104 on the February figure.
A total of 443,247 people received the PUP in the last week of March, with almost a quarter of this number under 25.
‘Grounds for optimism’
Government spending in the first quarter rose €2.5 billion compared with the same period last year as the State paid out supports to workers and businesses. The rolling 12-month exchequer deficit stands at just under €14 billion.
The cost of financial supports during the pandemic has had a “severe” impact on public finances, Mr Donohoe acknowledged, but there was also “grounds for optimism”, with innovation by companies and the consumer response boding well for the recovery of the Irish economy.
His comments came after the International Monetary Fund (IMF) said most advanced economies would emerge from the coronavirus crisis with little lasting damage thanks to the relatively rapid rollout of vaccines and their willingness to increase sharply public spending and borrowing.
The global economy is set to enjoy two years of rapid growth in 2021 and 2022 of 6 per cent and 4.4 per cent, the IMF said, revising its forecasts upwards.
