Ireland had a long way to fight with towering debt load after the financial crisis. But now coronavirus has plunged its finances back into deficit and pushed swaths of people out of work, sparking fierce political debate about what spending to cut and how large any reductions should be. Ireland into its worst-ever recession, with gross domestic product forecast to fall 12.4 per cent this year and possibly as much as 17 per cent.
“The next government will need to make some important and difficult decisions about its competing spending and tax objectives,” said Sebastian Barnes, acting chairman of the Irish Fiscal Advisory Council, a statutory budget oversight body.
But even as the fiscal council and ESRI called for a big stimulus plan from the next government, the prime minister said one of its first decisions will be to taper special coronavirus welfare payments that were introduced in March as almost 600,000 people lost work during the lockdown.
He estimated that a sum “of the order” of €10bn in stimulus could be needed over a two-year period to help restore the economy to growth and the incoming government will face €2bn-€3bn in “fiscal adjustments” annually for three or four years.
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