Coronavirus: Taoiseach insists €7bn stimulus plan is ‘proportionate’

The largest-ever cash injection for the ailing Irish economy has been announced by the Government in a bid to rescue it from the effects of the pandemic.

More than €5 billion in cash, along with €2 billion in loan guarantees for businesses, will be spread widely across public investments, worker and welfare supports, and funding for business and tax cuts, with Taoiseach Micheál Martin insisting that most of the money will be applied this year.

It is the single biggest cash stimulus ever for the economy – with business group Ibec estimating that it represents about 10 per cent of domestic demand in the second half of the year – and follows the example of other countries, notably the UK.

It will be funded by exchequer borrowing, which Mr Martin insisted was “proportionate and necessary”. He confirmed that the budget deficit this year would reach €30 billion.

Government spending is now running some €16 billion ahead of what was expected before the pandemic hit, a situation officials conceded was not sustainable in the long term. Nonetheless, senior sources also said the October budget was likely to feature additional stimulus measures.