Public finances continue to improve as deficit narrows to 4.9bn euros

Finance Minister Paschal Donohoe said the strong tax returns show the “strength of our economic recovery”.

Finance Minister Paschal Donohoe leaves RTE Radio 1 in Dublin (Brian Lawless/PA) (PA Wire)

Public finances are continuing to improve, with the deficit to the exchequer narrowing to 4.9 billion euros (£4.2 billion) at the end of November.

That compares with a 12-month rolling deficit that stood at 7.4 billion euros (£6.3 billion) at the end of October.

The reopening of society, higher employment and VAT returns, and a strong corporate tax take have been credited for the reduction.

Total tax revenues last month were 11.3 billion euros (£9.6 billion), which Finance Minister Paschal Donohoe said was a sign of the “strength of our economic recovery”.

The level of employment is now back at pre-pandemic levels

Paschal Donohoe

He added: “VAT receipts, in particular, reflect the significant rebound in consumer spending, while the income tax performance reflects the ongoing recovery in the labour market.

“Indeed, figures published last week show that the level of employment is now back at pre-pandemic levels, though this varies across sectors.

“Corporation tax receipts in November were very strong, reflective of a very robust performance of many higher-technology sectors during the pandemic.”

Corporate tax revenue amounted to over 4 billion euros (£3.4 billion) in November, an increase of 31% on the same period last year.

The VAT take was 2.6 billion euros (£2.2 billion), almost 25% higher than the same period in 2020.

Despite the positive performance, Mr Donohoe cautioned that there were many fiscal challenges ahead, “including the challenges now posed by the Omicron variant”.

“This is why, once the pandemic has passed, we must realign public revenue and expenditure while continuing to invest in public services, particularly in capital infrastructure,” he added.

Government spending to the end of November amounted to 74.7 billion euros (£63.5 billion), 1.2 billion euros (£1 billion) or 1.7% ahead on the same period in 2020.