Based upon the Irish government’s Summer Economic Statement (SES), it looks like housing has experienced a critical increase in capital spending over the upcoming years.
The SES broadly lays out what the government’s October Budget will end up being. It also goes over how the Government expects to tackle its next annual budgets in upcoming years. Typically, the SES closely adheres to predictions from the Stability Programme Update (SPU) released every year in the first quarter. However, this was not the case in 2021.
Instead, many forecasts were thrown away. Changes were made that included accounting for stronger than predicted growth in 2021 and increased borrowing and spending in the impending budget.
Michael McGrath and Paschal Donohoe, Minister for Public Expenditure and Minister for Finance respectively, have stated that capital expenditure is expected to increase by 8.5 percent while present expenditure is at 4.45 percent.
The rate of increase suggests that capital expenditure would accumulate to €50 billion over a four year period from 2022 to 2025. This is a significant increase from the previous four year period from 2018 to 2021 at €30 billion. Further, it has been acknowledged that a great deal of the increased expenditure will go towards housing.
McGrath has said that though he can not reveal the actual figure that will go to housing just yet, the amount will support an “adequate funding foundation.” Money allocated to housing has already been on the rise with an increase from just €800 million in 2018 to €2.8 billion in 2021.
A separate article of the Irish Times reported that the final statement has yet to be released as a result of discrepancies between the three government parties regarding the amount of exchequer funding that should go towards the housing crisis.
For this reason, it is not known for absolute certainty that housing will be a ‘big winner’ just yet because the specific numbers allocated only towards housing have not been revealed. A clear idea of this figure will remain unknown until it is agreed upon and the Housing For All scheme is released and the public receives more specific details regarding the 2022 Budget.
McGrath and Donohoe have stated that a fundamental element of the future plans will be to incrementally reduce all Covid measures and growth of the economy. According to Donohoe, an ultimate goal, not expected to occur until at least 2023, would be the government only having to borrow for capital. A final notable budgetary action is that the government has allotted numbers up to €500 million in every annual budget of the next four years to back tax cuts.
Curran, Ian. “Is Housing the ‘Big Winner’ From the Government’s Summer Economic Statement?” Journal.ie, 15 July 2021, https://www.thejournal.ie/budget-housing-spending-5496271-Jul2021/.
McGee, Harry. “Spending Levels To Underline Government’s Commitment to Housing – McGrath.” The Irish Times, 15 July 2021, https://www.irishtimes.com/news/politics/spending-levels-to-underline-government-s-commitment-to-housing-mcgrath-1.4621424.