Huge public spending on Covid-19 will soon be reduced, according to a warning the Government will issue next week to unions and employers.
It also says that, with the private sector recovery gaining momentum, it is necessary to roll back public supports so as not to overheat the economy.
The warning by the Department of Finance is outlined in papers circulated to stakeholders in advance of the National Economic Dialogue next week.
Officials point out that public debt is among the highest in the European Union, and on a per capita basis stands at about €45,000 per person. It is also among the highest levels in the world, they say.
Spending cuts or tax increases will be needed, according to the department, to finance future spending on pensions, healthcare and climate action.
The budget process is set to be fraught, as Ministers push for a continuation of the high spending of the Covid era, and the department urges curtailment.
The warnings also come as the hospitality sector is calling for increased financial support of up to double current levels if the return of indoor services is delayed due to the threat posed by the Delta variant.
Hospitality
The continuing uncertainty over whether indoor services in restaurants and pubs can resume on July 5th has sparked a backlash from hospitality representatives.
However, demands by restaurateurs and publicans for an early decision on their fate are not likely to be met.
The National Public Health Emergency Team (Nphet) is not due to meet until Wednesday. This will be followed by a Cabinet sub-committee discussion, with a final decision due after a full meeting of the Government on Thursday.
Sources suggested this timetable is unlikely to be changed as Nphet wants the most up-to-date data on the Delta variant as well as time to model the impact of its spread here.
Adrian Cummins, the chief executive of the Restaurants Association of Ireland said many restaurants will spend around €20,000 restocking ahead of July 5th.
“The least the Government can do is give us certainty around whether we’re going to open or not.”
He said the “summer is lost” to restaurants, particularly in tourist areas, if they don’t get a “good July”.
“The Government now need to step up to the plate and increase the level of payments if we’re going to be shut down for July,” he said, suggesting that the Covid Restrictions Support Scheme (CRSS) should be doubled.
One Minister conceded that the ongoing uncertainty is “really problematic” for the hospitality sector but cautioned that an early decision could be the wrong one and a later U-turn would be a “disaster”.
Government sources said financial supports are likely to be considered if there is a decision to postpone reopening, with one suggesting there would be “sympathetic voices in Cabinet”.
However, another source said there were no plans for increased financial supports, but that the CRSS would continue, as well as the Employment Wage Subsidy Scheme.
International travel
Separately, there is a continued expectation that non-essential international travel will resume from July 19th.
Following a meeting of EU leaders, there was no change in direction on restarting international travel next month, despite concerns around the Delta variant.
In particular, tourism-dependent Mediterranean countries are continuing to reopen to tourists, with several countries already using the Covid-19 certificate in a bid to ease travel.
Greece came under pressure for not requiring tourists to quarantine if they have received vaccines not yet approved by the European Medicines Agency, such as Russia's Sputnik or China's Sinopharm.
Equally, Portugal was in the spotlight for allowing travellers from Britain to enter without needing to quarantine despite the prevalence of the variant there.
However, each member state has the power to set its own regulations on travel, and though northern states indicated they would be more cautious, it seemed clear that there would be no EU-wide change on opening up for the summer season.
“There’s a clear direction of travel, excuse the pun,” Taoiseach Micheál Martin told journalists.”The precise timelines over the next six weeks as to when member states fully commit and engage [on the Covid-19 certificate] is something for the member states.”
Currently, the Government is aiming to restart non-essential international travel from July 19th, using the EU digital Covid certificate.
Minister for Health Stephen Donnelly separately added nine new countries to the list which come under the Mandatory Hotel Quarantine regime for passengers arriving in Ireland.
From Tuesday morning passengers arriving from Dominican Republic, Eritrea, Haiti, Indonesia, Kuwait, Kyrgyzstan, Myanmar, Russia and Tunisia must quarantine in a hotel.
