Ireland misses ‘soft’ deadline to apply for share of EU recovery money

Ireland has sent its annual budget update to the EU on deadline but has failed to submit a recovery plan for access to the bloc’s pandemic fund.

Although Friday’s recovery plan deadline was not a legal requirement, France and Germany did submit their plans to the European Commission together this week, to much fanfare.

In a joint press conference, German finance minister Olaf Scholz said the two were “partners for driving the European project forward”.

Ireland has been allocated around €900m from the bloc’s €750bn pandemic recovery fund, but the money comes with conditions.

Payments are linked action recommended by the Commission in its annual spring package, which for Ireland include moves on tax, housing and clean energy.

Mr Scholz and his French counterpart Bruno Le Maire told the Irish Independent this week that it was not their “style” to pressure governments on tax reforms.

The Department of Finance met Friday’s other deadline for submitting its updated budget, or “stability programme”, which sets out the government’s five-year spending and tax plans.

In it, the Department predicts the Irish economy will grow by 4.5pc this year and 5pc in 2022, with modified domestic demand - a more useful indicator of the domestic economy - projected to grow by 2.5pc this year and 7.5pc next year.

However, unemployment is expected to average over 16pc this year and more than 8pc in 2022.

The minister for finance, Paschal Donohoe, said the recovery depends on the success of the vaccination programme.

“The acceleration of the vaccination programme along with the efforts of the Irish public has allowed for an easing of public health restrictions over the coming months. This will allow for a substantive and sustainable recovery to begin,” said Mr Donohoe.

He said recent data on retail sales and VAT provided “further grounds for optimism for a solid recovery” as the lockdown eases.

But he said the government will have to address the country’s high debt, which is approaching a quarter of a trillion euros.

“Once the worst of the pandemic has passed, it will be necessary to address this by eliminating the deficit over time in a way that balances supporting the economy with continued fiscal sustainability. That is what the Government will do. Together, we will overcome the pandemic, rebuild our economy and return our people to work,” said Mr Donohoe.