Irish watchdog calls for large scale stimulus in October budget

FILE PHOTO: Eurogroup President Paschal Donohoe attends a news conference during the Informal Meeting of Ministers for Economics and Financial Affairs in Berlin, Germany, September 11, 2020. REUTERS/Hannibal Hanschke/Pool

DUBLIN (Reuters) - Ireland’s budget watchdog on Thursday called for the government to implement a “large-scale multi-year stimulus” in its 2021 budget on Oct. 13 due to “exceptionally high” uncertainty surrounding COVID-19 and Brexit.

The Irish Fiscal Advisory Council has for the past several years consistently called for more fiscal prudence from the government.

But it said in a statement that this year’s budget “should ensure that there is a substantial multi-year stimulus in place for 2021 and beyond to continue targeted support measures and to support demand”.

It said, however, that a roadmap should be set out as part of the budget to show how tax and spending priorities will be balanced over the next five years.

Finance Minister Paschal Donohoe said on Wednesday that he expected to post a budget deficit of at least 4.5% to 5.5% of gross domestic product in the 2021 budget, down from around 10% this year.

But he said that he would take into account advice from the fiscal council before finalising his plans.

Reporting by Conor Humphries; Editing by Catherine Evans