Growing economy here means less EU aid for Ireland – Finance Minister Paschal Donohoe
Ireland will get less funding from the European Union to recover from Covid 19 than our peers, due to the inflated size of the economy counted using gross domestic product (GDP).
The leprechaun’s economic effect means Ireland will spend EU funds on a smaller scale and in a more “targeted” way, Paschal Donohoe admitted.
The government has been promised € 853 million in grants and loans from the EU’s € 672 billion pandemic stimulus fund.
Fund allocations are based on growth rates, population and unemployment levels.
Finance Minister Paschal Donohoe said on Tuesday that the EU’s higher growth rate than Ireland in 2020 means the funding “is not of the scale that other countries will use.”
Ireland was the only EU economy to grow last year, according to a winter forecast released by the European Commission last week.
Gross domestic product (GDP) grew by 3% in Ireland 2020 thanks to multinational exports, it fell in the EU by 6.3% on average. While GDP is considered a poor measure of Ireland’s domestic wealth, it is the standard measure used by the EU.
“The impact on our economic performance over the past year has been very, very, very different from the effect some of our neighbors have felt because of Covid,” Donohoe said.
“I expect our plan to be very, very focused, and while no decision has been made on where the funding will be available from the EU stimulus fund, it is at least possible that we will make very targeted use of this funding by focusing on a number of specific areas or projects.
Before EU funding can flow, countries must submit national plans to the Commission and approve a law allowing the bloc to raise additional funds in the bond markets.
Ireland’s exact allocation under the fund – known as the Stimulus and Resilience Mechanism – will not be known until the EU releases final GDP data in June 2022.
Most of the money is expected to be released by the end of this year.
Mr Donohoe said the vaccination program and the related reopening of businesses will be “the main driver of economic performance in 2021 and 2022”.
He said the government would continue to support businesses for “a while” and give businesses advice “soon enough” on continuing the wage subsidy program for jobs.
Meanwhile, he said the high capital buffers in Irish banks helped them weather the Covid storm.
“It is important to stress that the levels of capital currently available to our banks now play a very valuable role in helping our banking system respond to the enormous economic consequences of this disease and the effect it has had on the economy. Irish, ”Paschal said. Donohoe Tuesday.
Data from the Banking and Payments Federation (BPFI) released on Tuesday showed Irish banks hold three times more capital in their mortgage portfolios than their EU counterparts – an additional € 2.5 billion.
According to BPFI’s study of over 600,000 mortgages across Ireland’s five retail banks, there is “a higher perceived risk in their mortgage portfolios compared to average capital requirements in Europe”.